Minister: Russia’s 2020 oil output may fall by 10% to 510 mln tns

MOSCOW, Sep 2 (PRIME) -- Russia’s oil output may fall by 10% to about 510 million tonnes in 2020, Energy Minister Alexander Novak said on Wednesday at a meeting with the government of the Khanty-Mansi Autonomous District.

“It is understandable that our production will be lower this year than in 2019. Our estimates show that judging by the schedule of coordinated actions our contraction amounted to about 19% from May to June. Taking into account that we have a gradual increase of production, the decrease will amount to about 13.8% from August to December from the planned levels we had for 2020,” he said.

“Correspondingly, we expect a fall of about 10% for the year in general, or to around 510 million tonnes.”

But for the OPEC+ oil output reduction deal, the oil prices could have been at U.S. $10–20 per barrel instead of $45 now, Novak pointed out.

Investment in the Russian oil industry is to fall by 20% in 2020 from 1.4 trillion rubles in 2019.

The ministry is working on a regulatory base to support the oilfield servicing industry.

“We will pay special attention to oilfield servicing. You know that we have prepared proposals for support of the oilfield servicing industry, we are now fleshing out the final conditions and the regulatory base together with the Finance Ministry and VEB.RF. I hope that we will release the regulatory base very soon,” he said.

He also said that the ministry hoped that appearance of coronavirus vaccines in the world and in Russia will stop a second wave of the pandemic and demand for oil recovers faster.

“Speaking of investment programs, it is obvious that we will also see a contraction this year. Last year, investment stood at about 1.4 trillion rubles in the oil industry. We have already seen contraction this year, and this figure is likely to be lower, but I don’t think that it will be significant. The Energy Ministry’s estimate for this year’s average is up to a 20% decrease,” he said.

NATURAL GAS, LNG

Novak also said that Russia’s natural gas production should also go down  by 10% on the year in 2020.

“Our gas sector is not an exception this year, it suffered from a significant contraction of global demand, and it had an impact on our work. I think that we will also see a decrease in the gas production this year of around 10% as compared with 2019 taking into account the current trend, and it is a noticeable figure that affects the general situation in this field,” he said.

Nevertheless, the ministry does not expect exports of liquefied natural gas (LNG) to fall this year.

“Our exports of liquefied natural gas will continue this year in line with our LNG development program and in line with the project that have already been launched. We will not see a significant contraction here, we will remain flat on the year or even go slightly higher than 2019,” he said.

(73.5849 rubles – U.S. $1)

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