The year 2020 was bitter trials to the whole world economy and especially to the oil and gas industry. Russia was not an exception in this regard.
The struggle between camps supporting the OPEC+ deal and a price war ended in spring when Moscow withdrew from the agreement and Saudi Arabia, in response, sharply increased its oil exports. At the same time, the progressing COVID-19 pandemic significantly reduced demand for oil, and these two factors led to a real price catastrophe.
Russia rushed to join OPEC+ again but in much tougher conditions, which resulted in an 8.6% decrease in the annual oil output. However, the situation concerning exports is much worse, as the Russian oil industry faces strategic risks of losing its essential markets.
The Cabinet was not lenient to the industry thinking that in the past few years oil producers accumulated sufficient reserves and even cheated the state has failed to invest the money spared on taxes.
The package of fiscal amendments passed in autumn 2020 looked evidently confiscatory. And it was an important element of the concept of new oil that becomes the foundation of the current state policy on the oil industry. It means that old fields are declared unpromising, and the stake is made on greenfields that should create new jobs and demand for products of relative industries. However, the state avoids thinking about the real costs of the production of hydrocarbons at new projects.
Before the oil industry, the breakthrough project was the production of LNG in the Arctic. And in 2020 it became evident that Russian liquefied natural gas, practically not contributing to state budget revenues, competed with Russian piped gas supplies on the European market. In the meantime, despite the tough sanctions war, Russia keeps laying new gas pipelines to Europe. All these factors question the expediency of the energy policy of Russia.
Meanwhile, voices of lobbyists of the green agenda sound more and more energetically, as they suggest radically restructuring our energy sector. And this is another challenge to the Russian oil and gas industry.
The NESF report wrapping up 2020 elaborates on the following questions:
- Will Russia withdraw from the OPEC+ deal?
- How did the OPEC+ deal influence the autumn reshuffle in the government?
- What is the new system of state regulation of the oil and gas sector?
- How did Russian companies fulfill oil output?
- Did the government support the oil services business?
- Will we manage to develop offshore and tight reserves amid sanctions?
- Will the state continue to subsidize LNG production?
- Why does Rosneft aggressively promote its Vostok Oil project?
- How did Rosneft cease being a state company?
- How did the Cabinet explain autumn changes in taxation of oil companies?
- What risks does the green policy pose to Russian oil and gas companies and what Putin thinks about the energy transition?
CHAPTER 1. LOOKING FOR NEW OIL. THE STATE RELIES ON TERMINATION OF OLD PROJECTS IN FAVOR OF NEW OIL VENTURES
1.1. COVID-19, collapsing prices and a new OPEC+ deal: the perfect storm for the Russian oil production industry
1.2. Observance of output reduction by companies
1.3. Influence of OPEC+ deal on fiscal changes in the Russian oil industry
CHAPTER 2. WHAT SHOULD OIL PRODUCERS ECONOMIZE ON: CAN PRODUCTION COSTS DROP LOWER?
CHAPTER 3. RESTRUCTURING THE STATE SYSTEM OF FES REGULATION
3.1. Bureaucratic rollercoaster of A. Novak and new Minister of Energy
3.2. General logic of government update and its influence on the oil and gas sector
CHAPTER 4. THE STATE KEEPS SUPPORTING LNG PRODUCTION
CHAPTER 5. THE ARCTIC AS AN EXAMPLE OF STATE CHOICE IN FAVOR OF NEW OIL
CHAPTER 6. PRODUCTION AND EXPORTS OF RUSSIAN HYDROCARBONS AMID NEW AND OLD SANCTIONS
6.1 In spite of sanctions: revival of the shelf
6.2. Will Bazhenov formations have a second chance?
6.3. Nord Stream 2: the main sanctions story of the year
CHAPTER 7. DISPUTES ABOUT ENERGY TRANSITION. THE GREEN AGENDA IN RUSSIA AND ITS PRESSURE ON HYDROCARBONS
7.1. Two camps of the climate agenda, Putin’s position
7.2. Actions of climate regulators in 2020
7.3. Fascination with renewables and hydrogen
All materials and sources used for issuing each report are thoroughly verified and analyzed by experts. The information is based on industry statistics, data of oil and gas companies, information of federal and regional mass-media, materials of conferences and round tables.
The analyst has pored on the following goals:
- Analyses of oil & gas and power industries, political risks within the energy sector, geopolitical problems in connection with the production of hydrocarbons and their supply to the global market, strategic development of companies, new production and transportation projects
- Consulting on the influence of political factors on the oil & gas business, decision-making within Russian energy companies and government bodies dealing with the energy industry
- Development of energy business concepts in Russia
- PR services for oil & gas corporations
- Analysis of images and reputations of energy corporations