Vitaly Yermakov

Senior Research Fellow

Vitaly Yermakov joined OIES in April 2019.  He has over 20 years of oil and gas industry experience.  Prior to joining OIES Vitaly worked as Head of Centre for Energy Policy Research at Higher School of Economics, Moscow, Commodity Strategist for Sberbank CIB, Visiting Researcher at KAPSARC, Saudi Arabia, Director of Research at Cambridge Energy Research Associates (CERA) and IHS CERA. Before that he was a manager at TNK-BP, an oil company.

Vitaly’s recent publications include papers for Oxford Institute of Energy Studies on the issues of spare gas productive capacity, gas demand flexibility, and gas taxation in Russia. 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 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.

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                    [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
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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 ) [2] => WP_Post Object ( [ID] => 31519 [post_author] => 111 [post_date] => 2019-04-15 10:23:34 [post_date_gmt] => 2019-04-15 09:23:34 [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 at home and abroad [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => russias-heavy-fuel-oil-exports-challenges-changing-rules-home-abroad [to_ping] => [pinged] => [post_modified] => 2019-04-15 10:30:39 [post_modified_gmt] => 2019-04-15 09:30:39 [post_content_filtered] => [post_parent] => 0 [guid] => https://www.oxfordenergy.org/?post_type=publications&p=31519 [menu_order] => 0 [post_type] => publications [post_mime_type] => [comment_count] => 0 [filter] => raw ) [3] => 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 ) [4] => 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 ) [5] => 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] => 6 [current_post] => -1 [in_the_loop] => [post] => 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. 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Latest Publications by Vitaly Yermakov