BOFIT Viikkokatsaus / BOFIT Weekly Review 2019/08

Russia extracted 556 million metric tons of crude oil and associated gas in 2018. Average daily crude production exceeded 11 million barrels a day last year. This is 2 % more than in the previous year. Thanks to a reinterpretation of the agreement on voluntary production restrictions among a group of oil-producing countries in June, Russia’s daily output increased by 4 % during the second half of 2018. However, new restrictions will likely reduce production in coming months. Also natural gas production grew last year. Production reached 725 billion cubic metres. This is 5 % more than in the previous year.

Russian crude oil and natural gas output

Source: CDU TEK.

Most of Russia’s oil and gas production still takes place near the Urals mountain range in the Perm, Komi, Nenets and Khanty-Mansi regions. Other fields are found in the Far East, lower Volga and Caucasus regions. About two-thirds of Russian oil production and one-third of gas production goes to exports, mostly to Europe. The combination of increased oil and gas export volumes from higher production and higher oil and gas prices lifted export earnings of the energy sector by a third.

Natural gas has traditionally been transmitted via large pipeline grids, but liquefaction makes cargo shipments possible, too. The recent phased start-up for the liquefied natural gas (LNG) facility on the Yamal peninsula has facilitated gas exports. At the end of last year, about 10 % of Russia’s natural gas exports were already being shipped in liquid form. In addition to new gas export pipelines to China and Germany under construction, new LNG facilities are planned.

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