Gas production in Russia fell by 11.4% in May

Gas production in Russia accelerated the decline. According to Kommersant, in May, gas production fell by 11.4%, to 50.2 billion cubic meters, and since the beginning of the year, production has decreased by 10.4%, to 285.2 billion cubic meters. Gazprom’s production falls the most: in May, the figure fell immediately by 24.4%, to about 28.8 billion cubic meters. According to analysts, this may be due not only to a decrease in exports, but also to a drop in domestic demand. In the future, the dynamics of Gazprom’s decline in production should slow down, as the high base effect will go away.

The volume of gas production in Russia in January-May 2023 decreased by about 10.4% year-on-year, to 285.2 billion cubic meters. In May, the Russian Federation produced 50.2 billion cubic meters of gas, which is about 11.4% less than a year earlier, sources familiar with the statistics told Kommersant. May is the last month when the high base of 2022 significantly affects the dynamics of gas production, since last year in May, Gazprom’s exports began to decline sharply amid the transfer of gas payments into rubles.

It was at Gazprom, according to Kommersant, that in May production fell the fastest – by 24.4% at once, to 28.8 billion cubic meters. In January-May, the company’s production amounted to 179.75 billion cubic meters, having decreased by 19.3%. The reduction in production by the monopoly reflects the decline in exports to Europe. Russian pipeline supplies to Europe are currently limited to pumping through Ukraine and the Turkish Stream. In Gazprom, Kommersant was told that they did not disclose production data.

Gazprom Neft reduced production by 14.5% in May to 2.5 billion cubic meters, for five months production amounted to 11.9 billion cubic meters (a decrease of 17.8% yoy).

The largest independent gas producer NOVATEK left gas production in May at the level of last year – 6.876 billion cubic meters, in January-May the company produced 33.9 billion cubic meters of gas (an increase of 1% yoy).

It is likely that the company’s production will decline in the summer due to scheduled maintenance at the flagship project of Yamal LNG. One of the lines of the plant is already on a planned shutdown, the head of the company Leonid Mikhelson reported at SPIEF-2023, and another will stop in August. Last year, NOVATEK, like other LNG producers in the world, sought to minimize technological pauses in order to take full advantage of high gas prices.

Of the major oil companies, Rosneft continues to increase production due to an increase in production at the Rospan project, the Taas-Yuryakh and Vostsibneftegaz fields. The company’s production in May increased by 65.5% compared to last year, to 6.5 billion cubic meters, in general, in January-May, the company increased production by 74%, to 32.665 billion cubic meters.

LUKOIL produced 1.5 billion cubic meters of gas in May (a decrease of 4%), in January-May, production decreased by 2%, to 7.67 billion cubic meters.

Sergei Kondratyev of the Institute of Energy and Finance notes that the decline in production accelerated in May 2023, despite the low base in 2022. The reason, in his opinion, could be relatively warm weather, which led to a decrease in domestic demand for gas in Russia – according to the System Operator (energy system dispatcher), the average temperature in the UES in May 2023 was 12.7 ° C against 11 .3°C in May 2022.

In the case of Gazprom, the dynamics were probably affected not only by the reduction in exports, but also by the decrease in supplies to the domestic market, he believes. At the same time, the production of independent producers continues to grow, having increased by 2.8 billion cubic meters year-on-year. Mr. Kondratyev also draws attention to the fact that production from PSA operators has increased significantly (by 0.38 billion cubic meters in May) against the background of a low base last year, caused by a reduction in production at the Sakhalin-1 project after the departure of Exxon Neftegas.

Tatyana Dyatel, Dmitry Kozlov