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Announcement of a series of analytical reports «The fuel and energy complex of Russia» - 2019

The Fuel & Energy
Complex of Russia:
Reality and Possibilities – 2019

The National Energy Security Fund announces its traditional series of analysis reports dedicated to the central issues of Russian fuel and energy sector development.

Subscribers will be presented with a detailed picture of the state of affairs in the fuel and energy sector, the industry’s most urgent problems, the system of government regulation of the oil and gas industry, and scenarios of its development in the medium term.

The year 2019 is a year of serious debate and decisions. Tax changes in the sector will continue, and active discussion is in store of the model of the functioning of the domestic fuel market and the fate of the domestic gas market. The OPEC+ deal will be reset.

But the main question is: how will the new system of control of the industry perform, developed after the 2018 presidential election?

At the same time, the country is already preparing for major political changes in 2024 and the same concerns oil and gas because political transformations directly influence redistribution of resources and property in the key sector of the Russian economy.

The industry which is in transition to exploiting new types of resources requiring special approaches increasingly often faces technological development problems.

The sources we use include our own information, industry statistics, information published by oil and gas companies, laws and bills, information published by federal and regional media outlets, and material made available at conferences and round table discussions.

The series consists of eight reports to be posted in March 2019 to January 2020.

1. Arctic: Actual Priority or Passing Fashion?

(March 29, 2019)

A separate clause in Putin’s inauguration Decree is dedicated to the Arctic. It says that transit along the Northern Sea Route must reach 80 million tonnes a year by as soon as 2024, i.e. it will grow by a factor of eight.

Obviously enough, key reliance is on hydrocarbons. How realistic are these plans? What is the future of oil and gas projects in the Arctic? How fast will infrastructure develop and the icebreaker fleet be built?

The report will present a detailed picture of the stakeholders in Arctic matters and analysis of the system of government administration of the region – the fight of the main clans for control of the Arctic agenda. The subjects of internationalisation of the Arctic and non-residents’ interests in the region will also be raised.

2. Sanctions against Russian Oil and Gas: Pressure Continued

(May 27, 2019)

Sanctions against Russian companies are only made heavier. It looks like they are here to stay.

How is the industry getting on, having been under the pressure of sanctions for nearly five years?

The report will show how distressing is the restriction on access to finance and if sanctions have caused technological shortages. Novelties of late are restrictions on partnership with Western majors in foreign projects.

It is important to understand if sanctions have become a barrier on Russian companies’ way to expansion abroad. A separate problem is caution of foreign giants in Russian projects.

3. Digitisation and Its Implications for Oil and Gas: Myths and Possible Reality

(June 24, 2019)

Digitisation is becoming an obvious fancy of the Russian government. This concerns all industries and oil and gas is not an exception. The Energy Ministry is already looking for a deputy minister to be in charge of digitisation.

In the report we will demonstrate what Western companies do about digitisation. What plans have Russian corporations for that and how realistic are they?

A separate question is what changes digitisation will lead to in terms of the employment structure and social situation. Is there already a change in demand for specialists in the sector?

4. Ukrainian Gas Hub: Climax at Hand

(August 19, 2019)

The construction of offshore gas pipelines round Ukraine is coming to an end. So is the contract for gas supply through Ukraine. Tension is mounting: Ukraine goes all out, it is ready to fight for keeping transit at all costs.

Gazprom hurries to create a new gas transport system, but offshore pipelines are not all. Eugal has to be built, and a system that has already been dubbed South Stream Lite.

When will the system of bypass gas pipelines start operating at full capacity? What countries will receive how much gas using the new routes? What prices will be charged for transport? How much transit will Ukraine keep? What will the terms of supply through its territory be? What awaits the domestic market in Ukraine?

5. Services and Mechanical Engineering for Oil and Gas: Are Industry’s Foundations Secure?

(October 7, 2019)

The condition of service companies causes serious concern. A good deal of work depends on them, so in this respect their comparison with the foundations of the oil and gas building will not be an exaggeration.

There are several problems at once here. This is the presence of non-residents in the sector, which constantly poses the question of the possibility of their withdrawal from the market because of the threat of sanctions. And this is also the policy of vertically-integrated oil companies towards service companies that often have to play the role of “poor relations.”

No less interesting is the question of the situation on the market for oil and gas equipment. Russia intends to switch to exploiting hard-to-recover reserves – but is the industry ready for that? And has not import substitution turned into the substitution of Chinese suppliers for Western ones?

6. Fiscal Policy on Oil and Gas Sector: Revised as Often as Wikipedia

(December 2, 2019)

Despite the Finance Ministry’s promises not to change the taxation system in the economy any more, this does not seem to include oil and gas. Changes of the fiscal system continue. The rules are being rewritten like articles in Wikipedia. And indeed this concerns all segments: production, processing, and the retail fuel market.

The report will sum up the acceleration of the tax manoeuvre. It will analyse if additional income tax has a chance of becoming more than an experimental model only or if the new tax should already be thought a failure. And it will evaluate the course of the Finance Ministry’s fight against tax benefits and the results of disputes between supporters and opponents of excise refunds and subsidies.

7. Gazprom: Challenges Abroad and at Home

(December 23, 2019)

The fate of Gazprom continues to attract special attention. Independent companies do not drop the subject of restructuring of the company and liberalisation of export.

Pressure mounts in Europe from green energy and LNG (including, by the way, that from Russia). The company has got used to setting record after record in export to Europe, but continuous successes take a lot of effort. At the same time, the company is expected to enter the Chinese market with gas supplied by pipeline in late 2019.

The completion of several grandiose pipeline projects at once raises the question of the next industrial priorities of the corporation. It is important to understand how the company is managed today and what staff and structural changes are under way in the state-controlled monopoly.

Regulation of Oil and Gas Sector in 2019 and Prospects for 2020

(January 13, 2020)

It is our tradition to finish the year with a concluding report that sums up the main events and trends of the year.

In the report you will find analysis of preliminary production results, the key government decisions concerning the industry, the fight for property, and changes in export policy; and of course, a forecast of the industry’s development in the medium term.


If you are interested to obtain please contact » Elena Kim

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Analytical series “The Fuel and Energy Complex of Russia”:

Arctic: Soviet-type Gigantomania or Breakthrough Project?
State regulation of the oil and gas sector in 2018, prospects for 2019
Gazprom on Path to New Reality
Looking for Best Tax Treatment of Oil and Gas: Fiscal Experiments Continued
The subject of taxation became the absolute hit of 2018. The government once again decided to rewrite the rules of the game. President Putin’s new inauguration decree served as the main pretext. It turned out that about 8 trillion roubles extra was necessary for the new national projects announced. The Cabinet did not take long to decide where the funds should be taken. The result was acceleration of the so-called tax manoeuvre started as far back as 1 January 2015. It suggested shifting the tax burden to the wellhead: the effect on the state budget of gradual abandonment of the export duty will be more than compensated for by quicker growth in mineral resources extraction tax (MRET). The laws on tax reform have already gone through the parliament and will take effect as of next year. This means nothing good for companies.
Results of Pivot to the East in Oil and Gas Sector

All reports for: 2015 , 14 , 13 , 12 , 11 , 10 , 09 , 08 , 07

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