Gas remained in the ground – Kommersant

According to Kommersant, gas production in the Russian Federation in January-March decreased by 10% year-on-year, to 180 billion cubic meters, in March – also by 10%, to 61 billion cubic meters. Gazprom’s production continues to decline amid falling exports to the EU, and in the first quarter the monopoly reduced gas production by almost 18%. At the same time, the production of the largest independent producers – Rosneft and NOVATEK – is growing. According to analysts, this trend will continue throughout the year due to an increase in the capacity of already launched projects.

Gas production in the Russian Federation in the first quarter of 2023 fell by 10% compared to the same period in 2022, to 180 billion cubic meters, sources familiar with the statistics told Kommersant. In March, gas production also fell by about 10% to 61 billion cubic meters.

The bulk of the decline in production falls on Gazprom. Since the beginning of the year, the company stopped disclosing statistics on gas production. According to Kommersant’s sources, the production volume of “other subsoil users”, which almost completely reflects the production of Gazprom, fell by 18% in the first quarter, to 117 billion cubic meters, in March – also by 18%, to 39 billion cubic meters. Gazprom Neft also drastically cut production by 18% to 8.6 billion cubic meters in the first quarter, and by 22% in March to 2.3 billion cubic meters. Gazprom did not comment on this data.

The largest independent producer NOVATEK produced 20 billion cubic meters in three months of 2023, which is about 1% more than a year earlier, but in March the company’s production increased immediately by 6%, to 7 billion cubic meters.

Rosneft increased gas production by more than 70%, to 19.7 billion cubic meters, in the first quarter. In March, the company’s gas production increased by 65% ​​to 6.7 billion cubic meters. The oil company continues to commission the capacities of Rospan, which this year will reach a “shelf” of 21 billion cubic meters, while the design capacities of the Kharampur field have grown tenfold year on year.

Gas production by other major oil companies – LUKOIL, Surgutneftegaz – was declining in March against the backdrop of a reduction in oil production. Thus, in January-March, LUKOIL reduced production by 3%, to 4.6 billion cubic meters, in March, production slightly decreased, to about 1.6 billion cubic meters. Surgutneftegaz for the first quarter reduced the figure by 14.5%, to 1.8 billion cubic meters, in March – by 14%, to 630 million cubic meters. The decline in production in the Russian Federation is a consequence of a significant reduction in Gazprom’s supplies to the EU countries after the outbreak of hostilities in Ukraine. The EU is historically the largest market for the company, but now supplies go only through the Turkish Stream and, at a minimum level, through the territory of Ukraine.

Gazprom is simultaneously increasing supplies to China from fields in Eastern Siberia, but they are not connected with pipelines supplying gas to the EU, and so far these volumes are not comparable with previous supplies to Europe.

The market is watching the production and exports of Gazprom against the background of the forthcoming preparation of the EU countries for the new heating season. While gas prices in Europe remain relatively low, while Gazprom is effectively deprived of the opportunity to increase exports in this direction: the Nord Stream gas pipeline system has been blown up, the Yamal-Europe pipeline is under Russian counter-sanctions.

Sergei Kondratyev of the Institute for Energy and Finance notes that the market is currently in an unusual situation – with a sharp decline in pipeline exports and weak demand in the domestic market, natural gas production by independent producers continues to grow. In general, according to him, in 2023, Rosneft’s gas production may exceed 85 billion cubic meters, increasing by 11 billion cubic meters year-on-year, NOVATEK will slightly increase production – up to 83-84 billion cubic meters.

Gas production in Russia in 2023, according to his expectations, will amount to 630 billion cubic meters against 673.8 billion cubic meters in 2022, Gazprom may reduce production to 385-390 billion cubic meters from 412.6 billion cubic meters in 2022.

Tatyana Dyatel