High oil prices and a reduction in the crude export duty enacted as part of the ’60-66-90’ tax regime in October 2011 continue to stem the decline at Russia’s mature fields. Supply continues to exceed expectations. The forecast for 2013 has been increased by 30 kb/d to average 10.8 mb/d, a growth of 0.6% annually. June liquids output increased to 10.9 mb/d, 2.1% higher y-o-y and 40 kb/d higher m-o-m. Rosneft and Gazprom each increased output by over 50 kb/d in June from prior-year levels. Brownfield production fell by only 0.5%, down from a 1.4% decline over the prior year. Rosneft’s Vankor field stayed at 430 kb/d in June, on par with April and May. On the other hand, Lukoil’s Western Siberian unit, which produced 890 kb/d in 2012, saw its production decline accelerate to -1.7% in 2Q13, from -0.1% during 2012.
The Russian State Duma accepted a proposal that allows the government to ease export duties and adjust the Mineral Extraction Tax (MET) for hard-to-recover oil, likely leading to incremental output. A new version of the offshore taxation law also includes an extension of the zero-MET period for the frequently delayed offshore Prirazlomnoye field from 2019 to 2022. The extension of the contract was an outstanding issue that Gazpromneft awaited before preparations could begin for a production start. The operator is now expecting production to start in Q4 but because of the field’s location offshore and its complexity we expect the start date to slip to 2014.
Source: International Energy Agency, July 2013 Oil Market Report