Russian Federation Oil and Gas Downstream Market - Growth, Trends, and Forecasts (2020-2025)

The market for Russian Federation oil and gas downstream is expected to grow at a CAGR of less than 3.5% during the forecast period of 2020-2025. Factors such as increasing demand for oil and natural gas and expansion in the oil refining sector are expected to boost the growth in the Russian Federation oil and gas downstream market during the forecast period. However, continued sanctions by the United States and member states of the European Union have hampered the prospects of significant development in the industry.

• Russia is the world's largest oil and gas exporter, and it is seeking ways to expand its refining industry to increase value from its vast hydrocarbon reserves rather than relying on sales of raw energy products. The task is being progressed, in 2019, mostly by the government-owned companies.
• Two new fields in the Yamal region have been discovered in the Russian Federation. They are expected to contain total reserves of more than 500 billion cubic meters (bcm) of gas. Production of the fields may act as an opportunity for further growth in the sector.
• Increasing consumption and production of natural gas is expected to boost the growth in the oil and gas sector. Oil production and consumption has grown slightly in 2017 - 2018 period.

Key Market Trends

Refining Capacity to Witness Growth

• In 2019, Tuapse Refinery, Orsk Refinery, Novokuibyshev Refinery, and many such refineries are being expanded or modernized, in the country, and may lead to an increase in the growth in the sector.
• In 2019, The Omsk Refinery is the Gazprom Group's leading oil refining company. It is one of Russia's most advanced and the world's largest refineries and is expected to undergo expansion phase in the forecast period.
• In 2018, Russian oil refineries produced approximately 6.7 million barrels per day, remaining at the same level for two consecutive years. The largest producer of oil refinery throughput is Rosneft.
• Hence, refining capacity is expected to witness significant growth with expansion and modernization leading to an increase in the refining capacity.

Increasing Natural Gas Consumption and Production to Drive the Market

• In the Russian Federation, oil production increased by 1.6% to 563.3 million tons of oil equivalent (mtoe) in 2018 from 554.3 Mtoe in 2017. Consumption of oil increases to 146.3 million tons of oil equivalent (Mtoe) in 2018 from 146.0 Mtoe in 2017. Increasing demand and an increase in the production of oil are boosting the growth in the market.
• In Russian Federation, natural gas production increased by 5.3% to 575.6 million tons of oil equivalent (Mtoe) in 2018 from 546.5 Mtoe in 2017. Consumption of natural gas increases to 390.8 million tons of oil equivalent (Mtoe) in 2018 from 370.7 Mtoe in 2017. Increasing demand for gas and increase in production is boosting the growth in the market.
• In 2019, China National Chemical Engineering Co. Ltd. and Baltic Chemical Complex (a subsidiary of RusGasDobycha) have signed an agreement to build a 13.3 billion USD petrochemical plant which is expected to be the largest in the world.
• Hence, increasing the consumption and production of natural gas is expected to increase the growth in the market. Investment in the oil and gas sector is also exected to act as a prominent driver in the industry.

Competitive Landscape

The Russian Federation oil and gas downstream market is consolidated. The major players are
PJSC Rosneft Oil Company, PJSC Lukoil Oil Company, PAO NOVATEK, PJSC Gazprom, and PJSC Surgutneftegas.

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