Gas production in Russia decreased by 5.5% in 2023

Gas production in the Russian Federation in 2023 decreased by 5.5%, to 636.7 billion cubic meters, said Deputy Prime Minister Alexander Novak. However, in December production increased by 3.8%, to 63 billion cubic meters. According to Kommersant, Gazprom’s production decreased by about 9% year-on-year, to 404 billion cubic meters, due to a reduction in exports to Europe; total exports of pipeline gas fell by a quarter. The government expects some recovery in production in 2024 due to increased exports from Gazprom to the east and the launch of the first train of NOVATEK’s new LNG plant.

Gas production in the Russian Federation at the end of 2023 decreased by 5.5% year-on-year, to 636.7 billion cubic meters, the magazine reported “Energy Policy” Deputy Prime Minister Alexander Novak. According to the Deputy Prime Minister, gas production at offshore fields at the end of 2023 increased by 10.9%, to 34.5 billion cubic meters. In December 2023, gas production increased by 3.8% compared to last year, to 63 billion cubic meters, sources familiar with Ministry of Energy statistics told Kommersant. This was mainly due to frosty weather in most Russian regions.

The production of “other producers,” including Gazprom’s figures, for 2023 amounted to about 404 billion cubic meters, which is 9.2% lower than a year earlier.

At the same time, in December, Gazprom’s production increased by 5% year-on-year, reaching 41.7 billion cubic meters. Gazpromresponsible for gas supplies to Russian consumers, turned out to be the main beneficiary of the cold weather in November-December.

However, the company’s exports continued to decline due to the loss European market. As Mr. Novak reported, pipeline gas exports from the Russian Federation in 2023 amounted to 91.4 billion cubic meters (a drop of 25% by 2022), LNG – 43.6 billion cubic meters (or about 32.3 million tons). Gazprom seeks to replace the European market by increasing supplies to China, as well as to the countries of Central Asia. According to the Deputy Prime Minister’s forecasts, in 2024, pipeline gas exports will increase by 11%, to 108 billion cubic meters, against the background of the gradual achievement of the design capacity of the Power of Siberia gas pipeline, and LNG exports will increase by 14%, to 38 million tons, due to launch of the first line of the Arctic LNG-2 LNG plant of NOVATEK.

Largest independent gas producer NOVATEK in 2023, it increased production by 0.3%, to 82.39 billion cubic meters. In December, the company produced 7.385 billion cubic meters, which is 6.3% higher than a year earlier. Thanks to Rospan and Kharampurneftegaz, Rosneft’s annual production reached approximately 66 billion cubic meters, which is 23.7% more than a year earlier. In December, the company produced 4% less gas than a year earlier—5.6 billion cubic meters. In recent months, average daily production at Rospan has been growing more and more slowly (plus 6.8% in December versus November), and at Kharampur has begun to decline (minus 6.4% in December versus November).

Gas production from other major oil companies continues to decline, likely due to the OPEC+ deal.

So, LUKOIL reduced production by 2.5%, to about 18 billion cubic meters. In December, production decreased by 4.5%, to 1.527 billion cubic meters. Gazprom Neft decreased production by 14.7%, to approximately 28.2 billion cubic meters, in December – by 11.6% year-on-year, to 2.54 billion cubic meters. “Surgutneftegaz” reduced gas production by 15.3%, to 7 billion cubic meters, in December – by 16%, to 0.563 billion cubic meters.

The results of the year were largely expected, notes Sergei Kondratiev from the Institute of Energy and Finance: “Although in recent months production has been growing year-on-year, at the end of the year we still saw a slight decline associated with the high base effect in the first half of the year.” Probably, the main contribution to the decline was made by the dynamics of Gazprom due to the reduction in exports, he believes. In general, according to the expert, 2023 turned out to be better than expected, and in 2024 the recovery in production will continue, as domestic demand remains high and supplies to China and the CIS countries will grow. According to his forecasts, by the end of 2024, production will reach 650–655 billion cubic meters.

Tatiana Dyatel, Dmitry Kozlov