Vitaly Yermakov

Senior Research Fellow

Vitaly’s research focus is on oil and gas in Russia and CIS. Before joining OIES in 2019 he worked for over 20 years in the industry holding positions of Commodity Strategist for Sberbank CIB, Visiting Researcher at KAPSARC, Saudi Arabia, Director of Research at Cambridge Energy Research Associates (CERA) and IHS CERA and a manager at TNK-BP, an oil company.

Vitaly’s recent publications include papers for Oxford Institute of Energy Studies on the issues of Russia-OPEC cooperation, Russian refining, Russia’s LNG and pipeline strategy, Russian gas spare productive capacity, gas demand flexibility, and gas taxation. He also published a paper for KAPSARC, Saudi Arabia on price competitiveness of US LNG and Russian pipeline gas in Europe.  Mr. Yermakov is also the author of over 50 CERA and IHS CERA analytical private reports, including analysis of gas demand issues and gas price regulation in Russia and Ukraine, analysis of tax changes for Russian oil and gas industries, regulatory reform in the Russian energy sector and comparative analysis of oil and gas transportation tariffs in Russia and North America.  He also led numerous consulting projects for the CERA and IHS CERA clients, including Russian tax reform for the oil sector, developing gas strategy and developing strategy of marketing LPG for major Russian companies, analysing gas transportation in Russia for a major Western company.

Vitaly has been lecturing for Energy Delta Institute’s executive MBA program on a wide range of topics, including natural gas and LNG developments and pricing, China’s gas demand, and Russian gas developments.  He also works with Higher School of Economics in Russia and is a frequent speaker at major industry conferences in Russia and abroad.  Mr. Yermakov holds a master’s degree from Duke University and a PhD from Samara State University.

Contact

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                    [post_date] => 2024-03-04 11:01:40
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                    [post_content] => Revenues from Russia’s oil and gas industry account for between 30 to 50 per cent of total federal budget revenues over the past decade, making them the most important single source of cash for the Kremlin. The Russian oil and gas sector contributes about 20 per cent of the country’s GDP on average, with wide fluctuations due to global price cyclicality and - more recently - to trade restrictions imposed by the West amid the conflict in Ukraine and Russia’s efforts to re-direct its oil and gas exports to new markets.  With drastically reduced public information about the Russian energy sector, statistics on Russia’s budgetary revenues from oil and gas from Russia’s Ministry of Finance have become even more significant. Tracking the changes in value and the composition of the oil and gas state take is key to understanding and evaluating the state policies toward the sector and the overall state of Russia’s economy.
                    [post_title] => Follow the Money: Understanding Russia’s oil and gas revenues
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                    [post_content] => The longer-term outlook for Russian oil production is uncertain. The IEA’s World Energy Outlook 2022 postulates a 2 million b/d drop for Russian oil production by 2030 in their STEPs scenario. However, this view ignores factors that have driven Russian oil production to date and an evaluation of how these might change in the future. Two main factors should be taken into consideration: first, that in the past twenty years, Russian oil companies have achieved very good results in managing the decline rates of the so-called “old” oil in Russia, and secondly, that during the past decade most of “new” oil additions to output were not from offshore or from tight oil formations but from onshore fields on the northern and north-eastern periphery of the developed oil provinces in Western Siberia. These projects are logistically more challenging and expensive but otherwise are conventional and do not require state-of-the-art technological solutions and, in this sense, are not critically dependent on Western technologies and expertise.

It is generally a consensus view that oil output in Western Siberia will decline, sooner or later, imposing pressure on Russia to prevent an overall decline in the national oil output. But the timing for the onset of the decline matters a great deal. If a higher and longer production plateau relative to the currently assumed numbers can be maintained, the total production profile for Russia needs to be re-evaluated.

Another easy assumption that many analysts seem to be making is that Western service companies have been indispensable for the Russian oil industry and that their exodus in 2022 is going to result in drastic drop of output. While some equipment and some exclusive software might not be available to the Russian service providers in the near term, there are substitutes, probably less efficient but nevertheless capable of delivering decent results.

It seems to be an exaggeration to think that the decline of legacy fields in Russia would force the Russian companies to undertake extremely expensive operations (e.g. in the Arctic offshore) to compensate the missing volumes. There are brownfield opportunities onshore with higher but generally moderate costs that could be used as part of the bridge strategy. The Vostok Oil project is mistaken for a principally next level project with regards to its complexity and difficulty. In fact, the challenge for this project is that it requires the creation of substantial new infrastructure in what is essentially a periphery region to Russia’s current upstream activities. In terms of below ground risks, it is not a project that requires next generation technologies.

Most of negative outlooks for future Russia’s oil production make a reservation that the output decline is likely to occur in the absence of accommodating fiscal policies by Russian regulators. There is always a conflict between the industry and tax collectors. At the same time, the Russian government has demonstrated time and again that while it hates to leave potential tax revenue on the table, it is at the same time ready to extend a helping hand to the sector at the time of trouble. The solutions (tax exemptions) have been ad hoc for most of the time; recently, with the expansion of Additional Profits Tax (APT) regime to the wider collection of assets, they finally seem to be becoming more systemic.
                    [post_title] => Russian oil output increases in 2022 amid unprecedented Western sanctions: What’s next?
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                    [post_content] => In 2022, following the Russia-Ukraine conflict and the unfolding of the de-facto trade war between the EU and Russia, Gazprom’s gas exports to Europe contracted sharply, by a staggering 90 bcm in a single year, raising questions about the prospects for Russia’s ability to balance its gas output in the near term and the risks to its future production potential, but more importantly about how, if at all Russia can re-direct volumes to alternative markets under extreme time pressure. Russia’s gas output is demand-driven, and amid the overall gas output decline in Russia, Gazprom’s own gas production in 2022 was affected disproportionately, while Russian oil companies and independent gas producers launched some of their long-delayed projects and actually increased gas production year-on-year. This has resulted in the re-emergence of very significant spare gas productive capacity for Gazprom, estimated at about 117 bcm for 2022 on an annual basis.  It is worth noting that while this amount represents one of the highest for a decade, it is less than the roughly 150 bcm of spare productive capacity that Gazprom had in 2015 and 2016. The abrupt disappearance of the European gas export market and an overhang of spare productive capacity represents a significant problem for Gazprom and for the Kremlin because of a threat to gas export revenues and high opportunity cost of idled investments. Russian gas strategists have formulated several ideas on how to mitigate the problem, including assigning extreme urgency to negotiating a new 50 bcma contract with China with gas deliveries via the recently proposed Power of Siberia-2 pipeline, offering Turkey an opportunity to re-sell Russian gas at a quasi-gas hub, and initiating negotiations on effective gas swaps with Kazakhstan and Uzbekistan for re-exports to China. In none of these plans, however, is Russia in control of the situation but will have to depend on other players. Russia has two, maximum three years to address the weak links in its gas export strategy. If the solutions are not found, the threat of sharply reduced export revenues will become very apparent since the counterbalancing effect from today’s very high gas prices is likely to start dissipating in the next few years. This might potentially force Russia to devalue the ruble and also to hike domestic gas prices to increase the tax base that would then become subject to a higher state tax take, ultimately reducing Russia’s macro-economic stability and shattering the historic social contract around gas supply to the domestic market.
                    [post_title] => “Catch 2022” for Russian gas: plenty of capacity amid disappearing market
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                    [post_content] => 

On February 4 2022 China’s President Xi Jinping and Russia’s President Vladimir Putin signed a series of new oil and gas contracts including an additional 10 bcma gas pipeline deal. This comment reviews how the new gas deal between Russia and China fits into their strategies, highlights the key implications of expanded gas cooperation between Russia and China and addresses some of the open questions in the deal. The main outcome of the agreement is a diversification of foreign trade options for both countries: The conflict in Ukraine has created a new reality in which Europe is going to reduce its energy dependence on Russia as soon as possible. Russia must therefore accelerate its Pivot East. From China’s perspective, the additional 10 bcma gas comes at an opportune time, as the country faces rising gas demand and highly volatile global LNG prices, but these incremental flows are still unlikely to diminish China’s appetite for imported LNG, nor should they be taken as a sign that an additional pipeline deal is imminent. Following the Russian invasion of Ukraine, Russia’s growing international isolation could lead it to offer China an attractively-termed deal on an additional pipeline, and Beijing will likely be inclined to accept it, but the raft of uncertainties surrounding China’s future demand in light of ongoing price volatility as well as its willingness to conclude another large agreement with Russia now may prompt it to hold off on an additional commitment just yet.

[post_title] => Russia and China Expand Their Gas Deal: Key Implications [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => russia-and-china-expand-their-gas-deal-key-implications [to_ping] => [pinged] => [post_modified] => 2022-03-31 10:35:49 [post_modified_gmt] => 2022-03-31 09:35:49 [post_content_filtered] => [post_parent] => 0 [guid] => https://www.oxfordenergy.org/?post_type=publications&p=44749 [menu_order] => 0 [post_type] => publications [post_mime_type] => [comment_count] => 0 [filter] => raw ) [4] => WP_Post Object ( [ID] => 44349 [post_author] => 111 [post_date] => 2021-11-24 13:40:27 [post_date_gmt] => 2021-11-24 13:40:27 [post_content] => The Northern Sea Route (NSR) – the Arctic shortcut between Europe and Asia – has emerged as a new strategic opportunity for unlocking and monetizing Russia’s vast oil and gas reserves in the Arctic. The NSR is an important element of Russia’s Arctic strategy, that now incorporates active development of the hydrocarbon riches, development of the Arctic ports and other infrastructure. It also relies on expanding domestic shipbuilding capabilities for Arctic-class tankers and a new generation of nuclear icebreakers as these are seen as important engines of economic growth and job creation in Russia. Russia has formulated ambitious goals for increasing NSR transportation turnover by 2035, relying primarily on a handful of oil and LNG projects by Gazpromneft, Novatek, and Rosneft. From a geo-political standpoint, the NSR provides a new avenue for developing international relations with new and existing customers for Russian hydrocarbons, while also allowing Russia to compete with key rivals in a rapidly globalizing market. This Insight reviews Russia’s NSR, assessing how Russia’s overall NSR strategy is set to develop. It highlights the preeminent role of the current and future Arctic oil and gas projects in achieving Russian goals for the NSR traffic, while also addressing some of the challenges the NSR faces in its quest to become an international shipping route. [post_title] => The Northern Sea Route: A state priority in Russia’s strategy of delivering Arctic hydrocarbons to global markets [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => the-northern-sea-route-a-state-priority-in-russias-strategy-of-delivering-arctic-hydrocarbons-to-global-markets [to_ping] => [pinged] => [post_modified] => 2021-11-24 13:40:27 [post_modified_gmt] => 2021-11-24 13:40:27 [post_content_filtered] => [post_parent] => 0 [guid] => https://www.oxfordenergy.org/?post_type=publications&p=44349 [menu_order] => 0 [post_type] => publications [post_mime_type] => [comment_count] => 0 [filter] => raw ) [5] => WP_Post Object ( [ID] => 44136 [post_author] => 111 [post_date] => 2021-09-21 11:44:35 [post_date_gmt] => 2021-09-21 10:44:35 [post_content] => The big bounce in Russian gas production in 2021 has proven to be insufficient to meet the simultaneous spikes in demand at home and abroad. Russian gas output has risen robustly and has been close to its maximum productive capacities but the necessity to fill the depleted domestic gas storage facilities in Q3 2021 limited the availability of Russian gas for Europe when it was most needed.  Indeed, Russian exports to Europe this year have reached the record levels last seen in 2018-19, focusing mostly on Turkey and Germany – the two markets that are connected to the Russian gas system by direct undersea pipelines.  Moreover, with other supply sources to Europe falling, and given the changing geography of Russian reserves, it appears that Russia cannot single-handedly balance sudden spikes in European gas demand. Russia is not running out of gas and its prolific gas reserves allow Russia to meet much higher overall demand, but this requires time, money, and contractual assurances of offtake. [post_title] => Big Bounce: Russian gas amid market tightness [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => big-bounce-russian-gas-amid-market-tightness [to_ping] => [pinged] => [post_modified] => 2022-02-14 11:11:04 [post_modified_gmt] => 2022-02-14 11:11:04 [post_content_filtered] => [post_parent] => 0 [guid] => https://www.oxfordenergy.org/?post_type=publications&p=44136 [menu_order] => 0 [post_type] => publications [post_mime_type] => [comment_count] => 0 [filter] => raw ) [6] => WP_Post Object ( [ID] => 43899 [post_author] => 111 [post_date] => 2021-07-26 11:04:42 [post_date_gmt] => 2021-07-26 10:04:42 [post_content] => Russian gas exports to Europe have traditionally meant one thing: pipeline supplies from Gazprom. But since December 2017, Russian LNG cargoes from the Yamal LNG project led by the private Russian company, Novatek, have increasingly made their mark, especially in North-Western Europe. Despite the original intention that Yamal LNG cargoes would be predominantly shipped to Asia - via the Northern Sea Route in the summer and via transshipment in Europe in the winter - Yamal LNG cargoes have increasingly remained in Europe, prompting debates over possible competition between the two sources of Russian gas. In our analysis, we find although Yamal LNG cargoes may indeed compete with Gazprom’s pipeline supplies in Europe, once the cargoes have left Yamal not only does the Russian government not have the ability to ‘manage’ competition between Gazprom and Yamal LNG, but those Yamal LNG cargoes become (to all intents and purposes) no different to any other LNG cargoes with which Gazprom’s pipeline supplies compete. We conclude that the Russian government has implicitly recognised this, and has chosen to support the expansion of Russia’s LNG export capacity even at the potential expense of competition with Gazprom’s pipeline supplies, as this is preferable to simply ceding market share to other non-Russian LNG suppliers. [post_title] => A Phantom Menace: Is Russian LNG a Threat to Russia’s Pipeline Gas in Europe? [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => a-phantom-menace-is-russian-lng-a-threat-to-russias-pipeline-gas-in-europe [to_ping] => [pinged] => [post_modified] => 2021-07-26 11:04:42 [post_modified_gmt] => 2021-07-26 10:04:42 [post_content_filtered] => [post_parent] => 0 [guid] => https://www.oxfordenergy.org/?post_type=publications&p=43899 [menu_order] => 0 [post_type] => publications [post_mime_type] => [comment_count] => 0 [filter] => raw ) [7] => WP_Post Object ( [ID] => 43763 [post_author] => 111 [post_date] => 2021-04-21 10:05:50 [post_date_gmt] => 2021-04-21 09:05:50 [post_content] => The “Big Three” global oil producers’ strategies have changed in response to three crises that affected oil markets in the last seven years. While the problems related to the cyclical calamities are familiar, the clean energy transition’s anticipated challenges are new. This article reviews the responses and strategy adjustments by Saudi Arabia, the United States, and Russia, and outlines new areas of uncertainty. Vitaly Yermakov, 'Changing Landscapes: New Strategies for the Big Three Oil Producers', Journal of International Affairs, April 2021. [post_title] => Changing Landscapes: New Strategies for the Big Three Oil Producers [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => changing-landscapes-new-strategies-for-the-big-three-oil-producers [to_ping] => [pinged] => [post_modified] => 2021-05-27 10:08:32 [post_modified_gmt] => 2021-05-27 09:08:32 [post_content_filtered] => [post_parent] => 0 [guid] => https://www.oxfordenergy.org/?post_type=publications&p=43763 [menu_order] => 0 [post_type] => publications [post_mime_type] => [comment_count] => 0 [filter] => raw ) [8] => WP_Post Object ( [ID] => 41428 [post_author] => 111 [post_date] => 2020-09-30 11:42:26 [post_date_gmt] => 2020-09-30 10:42:26 [post_content] => 2020 has been a tough year for Russian gas as it introduced a 'live experiment', testing the pain threshold levels of both Gazprom and other suppliers of gas to Europe under weak demand and rock-bottom prices.  This paper reviews the impact of the crisis on exports of Russian pipeline gas to Europe in 2020 and assesses the economics of these supplies under the wide price range that we have seen occurring in the past months. The obvious stresses of 2020 have put Gazprom on the defensive. It has given up its market share in Europe to LNG suppliers, primarily from the US, during the first half of 2020.  This picture, however, is somewhat misleading as it exaggerates a situation that was relatively short-term and unsustainable under lower prices. As a harbinger of things to come in the second half of 2020, deliveries of LNG to European regasification terminals declined sharply over the summer owing to shut-ins at US LNG facilities and a return of LNG demand in Asia. Despite the heavy toll from extremely low gas prices this year, Gazprom has evidently adopted a strategy of gradual adaptation to a loose market in Europe and hopes to last longer than most of its competitors. This strategy worked in the past and is likely to work in the near-term. From the longer-term perspective, however, the policy narratives of rapid energy transition towards a decarbonized future are taking centre-stage in Europe, with potential negative implications for Russia-Europe gas trade. Russia and Europe are quickly drifting apart under the pressures of global rivalries and different visions of the energy future. The best-case scenario in these circumstances is to avoid a disruptive and abrupt halt to Russia-Europe gas trade and hope that common sense prevails. [post_title] => Russian Gas: the year of living dangerously [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => russian-gas-the-year-of-living-dangerously [to_ping] => [pinged] => [post_modified] => 2020-10-01 10:45:11 [post_modified_gmt] => 2020-10-01 09:45:11 [post_content_filtered] => [post_parent] => 0 [guid] => https://www.oxfordenergy.org/?post_type=publications&p=41428 [menu_order] => 0 [post_type] => publications [post_mime_type] => [comment_count] => 0 [filter] => raw ) [9] => WP_Post Object ( [ID] => 38249 [post_author] => 111 [post_date] => 2020-06-02 10:59:35 [post_date_gmt] => 2020-06-02 09:59:35 [post_content] => Growing gas demand, stagnant/declining indigenous supply, the expiration of Gazprom's long-term transit contract on 17 May 2020 and the approaching end of the long-term gas import contract with Russia in 2022, along with a planned switch to alternative deliveries of LNG and Norwegian pipeline gas, are creating multiple challenges for Polish energy decision-makers. An important chapter in the history of Polish gas is coming to an end and a new era is beginning. This Insight discusses the evolution of the Russia-Poland gas relationship, identifies the problems that have emerged, and assesses the opportunities and the risks for both sides stemming from the end of the long-term transit and supply contracts. The Insight also examines how new Russian pipelines and the changes in flows of Russian gas to Europe are likely to impact the transit of Russian gas via Poland and what this means for Poland’s energy security. [post_title] => Russia-Poland gas relationship: risks and uncertainties of the ever after [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => russia-poland-gas-relationship-risks-and-uncertainties-of-the-ever-after [to_ping] => [pinged] => [post_modified] => 2020-06-02 10:59:35 [post_modified_gmt] => 2020-06-02 09:59:35 [post_content_filtered] => [post_parent] => 0 [guid] => https://www.oxfordenergy.org/?post_type=publications&p=38249 [menu_order] => 0 [post_type] => publications [post_mime_type] => [comment_count] => 0 [filter] => raw ) [10] => WP_Post Object ( [ID] => 36913 [post_author] => 111 [post_date] => 2020-04-13 10:33:30 [post_date_gmt] => 2020-04-13 09:33:30 [post_content] => Russia and Saudi Arabia have approved a production cut of 2.5 mb/d each from an agreed level of 11mb/d. However, there is some uncertainty about what this means exactly for Russia. Recent production of total liquids has been 11.3 mb/d, implying that the cut could actually be 2.8mb/d. However, this includes a significant amount of gas condensate, which was specifically excluded from Russian quotas in an agreement with OPEC in December 2019. Russia’s recent crude oil production has been around 10.5 mb/d, meaning that the reduction could be only 2mb/d if it applies to crude oil only. The agreement is something of a surprise given previous Russian arguments for a more considered response to the current collapse in demand caused by the Covid-19 epidemic. However, it may well reflect three facts: firstly, that a production cut may have been inevitable as soon as oil storage reached its limit, secondly that responsible action was required to alleviate a global crisis and thirdly that political gains may also be anticipated given the involvement of the US and G20. In addition, the cut may be easier to implement now that we are approaching the summer months when operating (and shutting in) West Siberian wells becomes easier. In addition, it is clear that the Kremlin and Russian oil companies have been surprised by the rapidity and depth of the recent oil price fall, which may have been another catalyst for the latest agreement. Nevertheless, it would appear that if low oil prices are here for an extended period then Russia can survive the crisis thanks to the flexible exchange rate, large financial reserves, low levels of debt and a low cost of oil production. As such, although Russia may have taken a tactical decision to cut oil production in the short-term for both oil market and geo-political reasons, its long-term strategy of attempting to enhance its competitive position as a robust low cost producer is likely to remain intact. [post_title] => The New Deal for Oil Markets: implications for Russia's short-term tactics and long-term strategy [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => the-new-deal-for-oil-markets-implications-for-russias-short-term-tactics-and-long-term-strategy [to_ping] => [pinged] => [post_modified] => 2020-04-13 10:33:30 [post_modified_gmt] => 2020-04-13 09:33:30 [post_content_filtered] => [post_parent] => 0 [guid] => https://www.oxfordenergy.org/?post_type=publications&p=36913 [menu_order] => 0 [post_type] => publications [post_mime_type] => [comment_count] => 0 [filter] => raw ) [11] => WP_Post Object ( [ID] => 35732 [post_author] => 111 [post_date] => 2020-03-02 12:32:55 [post_date_gmt] => 2020-03-02 12:32:55 [post_content] => In our previous Insight, The Russia-Ukraine gas transit deal: opening a new chapter, we examined how the recent Russia-Ukraine gas transit agreement was reached, and analysed the terms of the deal. This follow-up Insight analyses broader question of Russian gas transit to Europe, and the impact of the Russia-Ukraine deal on other routes that bring Russian gas to Europe. This includes longstanding routes, and two new pipeline projects, TurkStream and Nord Stream 2.  It also examines the impact of the deal on the Ukrainian gas market, and the likely short-term price effects in the European market. In doing so, this Insight analyses the broader context surrounding the Russia-Ukraine gas transit agreement. [post_title] => Implications of the Russia-Ukraine gas transit deal for alternative pipeline routes and the Ukrainian and European markets [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => implications-of-the-russia-ukraine-gas-transit-deal-for-alternative-pipeline-routes-and-the-ukrainian-and-european-markets [to_ping] => [pinged] => [post_modified] => 2020-03-02 12:32:55 [post_modified_gmt] => 2020-03-02 12:32:55 [post_content_filtered] => [post_parent] => 0 [guid] => https://www.oxfordenergy.org/?post_type=publications&p=35732 [menu_order] => 0 [post_type] => publications [post_mime_type] => [comment_count] => 0 [filter] => raw ) [12] => WP_Post Object ( [ID] => 33121 [post_author] => 111 [post_date] => 2019-11-22 11:56:15 [post_date_gmt] => 2019-11-22 11:56:15 [post_content] => The successful launch of Novatek’s Yamal LNG project has brought Russia’s plans to develop its LNG industry into the spotlight, and this paper by James Henderson and Vitaly Yermakov examines the prospects for the next decade and more. The Russian government has laid out some aggressive expansion plans, with both commercial and geo-political consequences, and Novatek seems to have taken on the role of “Russia’s LNG champion” as the country seeks to become one of the top four global exporters by 2030. Gazprom and Rosneft also have important plans, and this paper analyses how LNG is now becoming a core part of Russian export strategy as well as a significant catalyst of domestic economic and industrial growth. [post_title] => Russian LNG: Becoming a Global Force [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => russian-lng-becoming-a-global-force [to_ping] => [pinged] => [post_modified] => 2019-11-22 12:20:00 [post_modified_gmt] => 2019-11-22 12:20:00 [post_content_filtered] => [post_parent] => 0 [guid] => https://www.oxfordenergy.org/?post_type=publications&p=33121 [menu_order] => 0 [post_type] => publications [post_mime_type] => [comment_count] => 0 [filter] => raw ) [13] => WP_Post Object ( [ID] => 31673 [post_author] => 111 [post_date] => 2019-06-17 11:46:59 [post_date_gmt] => 2019-06-17 10:46:59 [post_content] => The contamination of the Druzhba pipeline with organic chlorides became the most serious interruption of oil supplies in the 55-year history of oil trade on this key route. This is a follow-up to the OIES Comment published in May 2019 that provided a background to the incident and discussed some of the potential implications of the contamination of the Druzhba pipeline. This comment argues that while the worst of the crisis is over, it is by no means the end of the story. There is little doubt that in the aftermath of the incident European refineries and policy makers will focus on security of supply issues, including options to diversify away from Russian crude. The issue of compensation for the oil contamination in the Druzhba system may become highly contentious. Any changes to Russia’s domestic oil pipeline regulation along the lines of greater control and more checks may increase costs for Russian oil producers. [post_title] => The Druzhba Pipeline Crisis - The Lessons for Russia and for Europe [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => the-druzhba-pipeline-crisis-the-lessons-for-russia-and-for-europe [to_ping] => [pinged] => [post_modified] => 2019-06-17 11:46:59 [post_modified_gmt] => 2019-06-17 10:46:59 [post_content_filtered] => [post_parent] => 0 [guid] => https://www.oxfordenergy.org/?post_type=publications&p=31673 [menu_order] => 0 [post_type] => publications [post_mime_type] => [comment_count] => 0 [filter] => raw ) [14] => WP_Post Object ( [ID] => 31545 [post_author] => 111 [post_date] => 2019-05-07 11:41:12 [post_date_gmt] => 2019-05-07 10:41:12 [post_content] =>

The contamination of the Druzhba pipeline with organic chlorides became the most serious interruption of oil supplies in the 55-year history of oil trade on this key route. While it appears to be a one-off event that has not brought about loss of life or affected the environment, the scale of the incident is such that it has had a profound impact on the whole value chain, from production facilities in Russia to refineries in Central Europe. This comment discusses the potential short-term and long-term implications of this key incident.

[post_title] => The Domino Effect: contaminated oil in the Druzhba oil pipeline - implications of the incident for Russia and Europe [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => domino-effect-contaminated-oil-druzhba-oil-pipeline-implications-incident-russia-europe [to_ping] => [pinged] => [post_modified] => 2019-05-07 11:41:12 [post_modified_gmt] => 2019-05-07 10:41:12 [post_content_filtered] => [post_parent] => 0 [guid] => https://www.oxfordenergy.org/?post_type=publications&p=31545 [menu_order] => 0 [post_type] => publications [post_mime_type] => [comment_count] => 0 [filter] => raw ) [15] => WP_Post Object ( [ID] => 44619 [post_author] => 111 [post_date] => 2019-04-10 15:53:06 [post_date_gmt] => 2019-04-10 14:53:06 [post_content] => The Russian refining system still has a significant legacy from its Soviet past, when refineries were located in relatively remote regions to serve the military and industrial complex and output of fuel oil was encouraged to supply heavy industry. However, this focus on the lower end of the barrel left a significant need for upgrading as Russia entered the post-Soviet era and demand for lighter products increased. The government has tried to provide a series of incentives to encourage Russia’s major oil companies to invest in upgrading. Differentiated tax rates, adjust of export tariffs, re-alignment of upstream and downstream taxes and even a command by the then Prime Minister Vladimir Putin that the industry must act to improve its performance have produced some results, particularly since 2015. Since then fuel oil output has declined rapidly, but with demand also falling Russia continues to produce a surplus. Plans for further additions of more complex refining units have been made, thanks to yet more tax incentives, but it would still appear that not all the players will respond as the government hopes. A number of small players may continue to focus on the simpler and less expensive processes, and companies that are the subject of international sanctions have also been given an effective dispensation to slow their upgrading efforts. Many independent refineries are likely to continue using the tactics of selling surrogate refined products without paying excise taxes, to remain afloat. Lower margins for those refineries that are part of Russian vertically integrated companies are likely to be cross-subsidized by profitable upstream operations. Also, the adjustment could take longer than expected due to the social risks of shutting down inefficient facilities.  As a result, it would seem that the planned decline in Russian fuel oil output will be at the slow end of the planned range. This is a concern because the global market for fuel oil is set to be further constrained by the introduction of tighter IMO rules on the use of high sulphur fuel oil in the maritime sector from 2020. As shipping companies are forced to use more environmentally friendly fuel and reduce emission, Russian refiners which produce excess fuel oil could find their margins significantly squeezed. [post_title] => Russia’s heavy fuel oil exports: challenges and changing rules abroad and at home [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => russias-heavy-fuel-oil-exports-challenges-and-changing-rules-abroad-and-at-home [to_ping] => [pinged] => [post_modified] => 2022-03-07 15:57:06 [post_modified_gmt] => 2022-03-07 15:57:06 [post_content_filtered] => [post_parent] => 0 [guid] => https://www.oxfordenergy.org/?post_type=publications&p=44619 [menu_order] => 0 [post_type] => publications [post_mime_type] => [comment_count] => 0 [filter] => raw ) [16] => WP_Post Object ( [ID] => 31443 [post_author] => 111 [post_date] => 2019-02-25 11:16:38 [post_date_gmt] => 2019-02-25 11:16:38 [post_content] => The question of flexibility is always important for the gas industry because of the seasonal nature of gas demand. In the past few years the role of flexible Russian gas in meeting Europe’s growing call on gas has been indispensable. This paper looks at how Russia meets its own flexibility requirements in the domestic market and whether peak domestic demand for gas in Russia can introduce constraints on seasonal export flow flexibility. It proceeds with analysis of the roles of seasonal production swings and gas withdrawals from storage in Russia and in Europe in covering seasonal demand peaks. [post_title] => It Don’t Mean a Thing, If It Ain’t Got That Swing: Why Gas Flexibility Is High on the Agenda for Russia and Europe [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => dont-mean-thing-aint-got-swing-gas-flexibility-high-agenda-russia-europe [to_ping] => [pinged] => [post_modified] => 2019-02-25 11:16:38 [post_modified_gmt] => 2019-02-25 11:16:38 [post_content_filtered] => [post_parent] => 0 [guid] => https://www.oxfordenergy.org/?post_type=publications&p=31443 [menu_order] => 0 [post_type] => publications [post_mime_type] => [comment_count] => 0 [filter] => raw ) [17] => WP_Post Object ( [ID] => 31312 [post_author] => 111 [post_date] => 2018-12-17 09:30:16 [post_date_gmt] => 2018-12-17 09:30:16 [post_content] => The concept that Russia has a huge amount of spare gas production capacity has been a key theme for the European gas market since 2012, when Gazprom's long-anticipated launch of the Bovanenkovo field on the Yamal peninsula coincided with a fall in demand for its gas at home and abroad.  The result was that Russia had at maximum around 200bcm of spare capacity on an annual basis, providing it with huge supply flexibility and a large source of gas available at low short-run marginal cost. However, since 2016 the situation has started to change on the demand side. The rapidly increasing call on Gazprom’s gas in Europe in 2017-18, along with some recovery in Russia’s domestic gas consumption, have increased demand for Gazprom's gas.  The supply side responded, but the ramp-up of production at Russia’s new gas fields to planned levels and higher output at balancing fields in response to higher demand have reduced the cushion of spare productive capacity.  At the same time, the natural decline of production at older gas fields has been taking its toll, so that by the end of 2018 worries about the availability of Russian gas for meeting peak demand on a seasonal basis have returned. This paper outlines the key dynamics that are changing the balance and assesses the future risks.

 

[post_title] => Shrinking surplus - the outlook for Russia's spare gas productive capacity [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => shrinking-surplus-outlook-russias-spare-gas-productive-capacity [to_ping] => [pinged] => [post_modified] => 2018-12-14 13:18:12 [post_modified_gmt] => 2018-12-14 13:18:12 [post_content_filtered] => [post_parent] => 0 [guid] => https://www.oxfordenergy.org/?post_type=publications&p=31312 [menu_order] => 0 [post_type] => publications [post_mime_type] => [comment_count] => 0 [filter] => raw ) [18] => WP_Post Object ( [ID] => 30708 [post_author] => 111 [post_date] => 2017-10-31 11:46:14 [post_date_gmt] => 2017-10-31 11:46:14 [post_content] => In a world of low commodity prices the potential for conflict between hydrocarbon producers and governments over tax revenues is exacerbated. In Russia this is even more true because the state relies so heavily on taxes from the oil and gas sectors and because producers are increasingly having to invest in new more remote assets rather than rely on declining Soviet-era low-cost fields. In the gas sector the state has attempted to address this issue by offering a differentiated royalty system that allows discounted rates for new investment, but because of the oversupply of gas in Russia this has led to some unforeseen consequences. Gazprom, as the largest producer, has prioritised production from new more expensive fields with a lower tax burden rather than exploit some of its lower cost existing assets, with the result that government revenues have not been maximised and Russia’s competitive position in global market has not been optimised. This paper explores the implications of this outcome and discusses potential changes in policy which could alleviate the problems. [post_title] => Gas and Taxes: The Impact of Russia's Tinkering with Upstream Gas Taxes on State Revenues and Decline Rates of Legacy Gas Fields [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => gas-taxes-impact-russias-tinkering-upstream-gas-taxes-state-revenues-decline-rates-legacy-gas-fields [to_ping] => [pinged] => [post_modified] => 2017-11-21 11:14:27 [post_modified_gmt] => 2017-11-21 11:14:27 [post_content_filtered] => [post_parent] => 0 [guid] => https://www.oxfordenergy.org/?post_type=publications&p=30708 [menu_order] => 0 [post_type] => publications [post_mime_type] => [comment_count] => 0 [filter] => raw ) ) [post_count] => 19 [current_post] => -1 [before_loop] => 1 [in_the_loop] => [post] => WP_Post Object ( [ID] => 47086 [post_author] => 974 [post_date] => 2024-03-04 11:01:40 [post_date_gmt] => 2024-03-04 11:01:40 [post_content] => Revenues from Russia’s oil and gas industry account for between 30 to 50 per cent of total federal budget revenues over the past decade, making them the most important single source of cash for the Kremlin. The Russian oil and gas sector contributes about 20 per cent of the country’s GDP on average, with wide fluctuations due to global price cyclicality and - more recently - to trade restrictions imposed by the West amid the conflict in Ukraine and Russia’s efforts to re-direct its oil and gas exports to new markets.  With drastically reduced public information about the Russian energy sector, statistics on Russia’s budgetary revenues from oil and gas from Russia’s Ministry of Finance have become even more significant. Tracking the changes in value and the composition of the oil and gas state take is key to understanding and evaluating the state policies toward the sector and the overall state of Russia’s economy. [post_title] => Follow the Money: Understanding Russia’s oil and gas revenues [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => follow-the-money-understanding-russias-oil-and-gas-revenues [to_ping] => [pinged] => [post_modified] => 2024-03-04 11:01:40 [post_modified_gmt] => 2024-03-04 11:01:40 [post_content_filtered] => [post_parent] => 0 [guid] => https://www.oxfordenergy.org/?post_type=publications&p=47086 [menu_order] => 0 [post_type] => publications [post_mime_type] => [comment_count] => 0 [filter] => raw ) [comment_count] => 0 [current_comment] => -1 [found_posts] => 19 [max_num_pages] => 0 [max_num_comment_pages] => 0 [is_single] => [is_preview] => [is_page] => [is_archive] => 1 [is_date] => [is_year] => [is_month] => [is_day] => [is_time] => [is_author] => [is_category] => [is_tag] => [is_tax] => [is_search] => [is_feed] => [is_comment_feed] => [is_trackback] => [is_home] => [is_privacy_policy] => [is_404] => [is_embed] => [is_paged] => [is_admin] => [is_attachment] => [is_singular] => [is_robots] => [is_favicon] => [is_posts_page] => [is_post_type_archive] => 1 [query_vars_hash:WP_Query:private] => a913b07814310f736d1516446c07f036 [query_vars_changed:WP_Query:private] => [thumbnails_cached] => [allow_query_attachment_by_filename:protected] => [stopwords:WP_Query:private] => [compat_fields:WP_Query:private] => Array ( [0] => query_vars_hash [1] => query_vars_changed ) [compat_methods:WP_Query:private] => Array ( [0] => init_query_flags [1] => parse_tax_query ) )

Latest Publications by Vitaly Yermakov