Russia’s competitive landscape

Gazprom

It has been reported that Gazprom holds the largest volume of natural gas reserves in the world, totalling 70% of Russia’s gas resources and 18% of the world’s resources. Due to this, Gazprom accounts for 15% of global gas output and 78% of Russia’s gas output in total. In 2013, natural gas export levels for Gazprom increased 16% year on year to 161.5 billion m³.

When it comes to LNG, Gazprom has a 50% operating stake in the Sakhalin II LNG project, of which Shell has a 27.5% share. Shell is at the moment reportedly in talks with Gazprom in the hope of adding a third liquefaction train to the facility. The two companies have also signed a letter of intent to explore hydrocarbon resources and develop them offshore Arctic Russia.

Gazprom’s oil operation is known as Gazprom Neft and following acquisitions has become a global oil producer and refiner. As of December 2013, the company was in possession of 2.29 billion t of oil equivalent, a 7.7% rise year on year.

Oil sector diversification

While Gazprom dominates the natural gas sector, there is more diversification in Russia’s oil sector. Rosneft is the main producer but there are other both privately owned and regional producers such as Lukoil and Bashneft in the oil production market as well.

Rosneft is responsible for more than 40% of Russian oil production and in 2013 produced 4.2 million bpd of oil and other liquid hydrocarbons. Lukoil is responsible for 16.6% of Russia’s oil production as well as 17.7% of the country’s refining throughput. Surgutneftegaz, one of Russia’s privately owned companies, reported downstream assets of 350 000 bpd, in the form of the Kirishi refinery in 2013. The refinery is reported to run above capacity for large portions of the year. Bashneft’s oil production is said to have increased by 4.1% year on year in 2013 to 16.1 million t. The company also reported increases in its refining sector of 3% year on year, hitting a refining capacity of 21.4 million t.

Outside interest

In 2011, Total made a big move in to the Russian LNG sector with an agreement to help Novatek develop the Yamal LNG project. Total currently own a 12.08% share in the facility but is now looking to boost levels to 19.4% by the end of the year.

Repsol of Spain and Alliance Oil, an independent company have formed a Russian joint venture company that focuses on exploration and production in Russia as well as Kazakhstan. Repsol has also bought Russian exploration company Eurotek that comes with two gas fields in Western Siberia.

China’s influx

Russia is one of China’s biggest sources of fossil fuels so it is no surprise that China is investing in the region. CNPC and Rosneft have an agreement to jointly explore and develop offshore blocks in the Arctic along with onshore projects in East Siberia. CNPC has also entered in to a 20 year agreement with the Yamal LNG project for 3 million tpy of LNG to be shipped.

Edited by Claira Lloyd

Read the article online at: https://www.oilfieldtechnology.com/exploration/20102014/russia-competitiveness-oil-gas-bmi/