Gas production increased in Russia in September and October 2023

Gas production in the Russian Federation is growing relative to last year’s figures for the second month in a row. Thus, in September, production growth amounted to 2.5%, to 47.83 billion cubic meters, while according to the results of three quarters, production fell by 5.7%, to 474 billion cubic meters. Gazprom increased production in September by 4% year-on-year, to 29 billion cubic meters. Analysts explain the positive dynamics by increased production at Gazprom’s Kovyktinskoye field and within the Sakhalin-1 project. In addition, over the past two months, production dynamics have been increasingly influenced by the low base of last year.

In January-September 2023, gas production in the Russian Federation decreased by 5.7% compared to the same period last year, to 474.375 billion cubic meters (data given taking into account gas flared), sources familiar with Ministry of Energy statistics told Kommersant. . However, in September, production increased by 2.5% year-on-year, to 47.83 billion cubic meters (data are provided excluding gas flared). In January-August, gas production, according to Kommersant, decreased by 10.2%, to 409.6 billion cubic meters; in August, gas production in the Russian Federation increased by 2.7% year-on-year, to 47.4 billion cubic meters ( excluding gas flared).

The production volume of “other subsoil users,” which almost exactly reflects Gazprom’s now undisclosed indicators, decreased by 13.75% year-on-year over the nine months, to 289.3 billion cubic meters. In September, production by “other subsoil users” increased by 4%, to 29 billion cubic meters of gas, after in August it showed annual growth for the first time in the last 16 months (by 3.3% by August 2022).

Gazprom has been reducing production for a long time due to a decrease in exports to Europe: the Russian Federation, which was the largest gas supplier to Europe before the start of hostilities in Ukraine, is losing its share on the continent with growing demand for LNG in EU countries. Currently, supplies of Russian pipeline gas go to Europe in relatively small volumes in transit through Ukraine and through the Turkish Stream. Gazprom did not comment on production statistics.

In January-September, Gazprom Neft reduced gas production by 12.7% year-on-year, to 21.5 billion cubic meters; in September, the company produced 16.8% less than a year earlier, about 2 billion cubic meters.

The largest independent gas producer NOVATEK in January-September reduced production by 2% compared to last year, to 58.6 billion cubic meters. In September, the company’s production remained approximately at the level of last year – 6.47 billion cubic meters.

In nine months, Rosneft increased production by 59%, to 57.9 billion cubic meters, by increasing the capacity of Rospan and the Kharampur field. But already in September, production dynamics slowed down – growth amounted to 3.7%, to 5.3 billion cubic meters, due to the leveling off of the base effect, since the increase in production at Rospan and Kharampur occurred in the fall of last year. This year Rospan should reach a production plateau of 21 billion cubic meters per year.

LUKOIL and Surgutneftegaz reduced production in September, likely due to restrictions on oil production (and, accordingly, associated gas) under the OPEC+ agreement. Among the oil companies, Slavneft has the largest growth – 2.2 times year on year – due to the multiple increase in production by Slavneft-Krasnoyarskneftegaz, however, due to small production volumes, this does not have a significant impact on the all-Russian dynamics.

Sergei Kondratyev from the Institute of Energy and Finance believes that gas production in September increased mainly due to increased production by Gazprom (probably due to increased production at the Kovyktinskoye field for supplies to China via the Power of Siberia) and due to the restoration of oil production and associated gas at the Sakhalin-1 project of Rosneft.

At the same time, the dynamics of production in August-September is influenced by the effect of the low base of last year – in August-September 2022, Nord Stream 1 was no longer working, and on September 26, sabotage was committed on the gas pipeline, Mr. Kondratiev recalls. “As a result, gas exports in September 2022 were low, and the results of September 2023, taking into account the increase in supplies through the Power of Siberia, turned out to be better than last year,” he believes. Weak domestic demand due to warm weather in the European part of the Russian Federation did not have a significant impact on September production. According to the System Operator (energy system dispatcher), in September 2023 the average temperature was 13.6°C (+2.9°C compared to last year), which led to a reduction in supplies to the domestic market: for example, gas consumption in Moscow in September it fell by 12% year-on-year, in St. Petersburg by 26%. Perhaps Gazprom has increased injection into underground gas storage facilities, the analyst believes. The head of the company, Alexey Miller, indirectly confirmed this on October 25, announcing a record gas reserve in storage facilities – 72.84 billion cubic meters.

Tatiana Dyatel, Dmitry Kozlov