FSU and Russia Oil Supply – August 2012

Total former Soviet Union’s (FSU) oil supply is estimated to increase by 0.11 mb/d in 012 to average 13.35 mb/d, representing a downward revision of 25 tb/d from the previous month. The revision came from Azerbaijan and Other FSU, while the supply forecasts for Russia and Kazakhstan remained steady from the previous MOMR.

Russia’s supply is expected to drive the growth in the FSU, while Kazakhstan’s and Azerbaijan’s supply is seen as remaining flat in 2012. According to preliminary data, FSU supply averaged 13.30 mb/d in the first half of 2012, an increase of 30 tb/d from the same period of 2011. On a quarterly basis, total supply is forecast to average 13.36 mb/d, 13.25 mb/d, 13.35 mb/d and 13.43 mb/d respectively. Supply in China is seen to increase by 70 tb/d to average 4.21 mb/d in 2012. Other Europe’s supply is expected to remain unchanged from 2011 and average 0.14 mb/d in 2012.

Russian oil production is forecast to increase by 70 tb/d to average 10.34 mb/d in 2012, unchanged from the previous MOMR. The expected growth in 2012 is the lowest since 2008. Preliminary data indicated that Russian supply averaged 10.32 in July, close to the highest level achieved so far in 2012. July’s healthy production level is in line with forecasts.

The expected increase in the Vankor field’s output, in addition to other developments, supports Russia’s supply outlook. Additionally, new barrels from the Nenets regions are seen as providing further support to growth in 2012. However, the risk to the forecast remains at a high level, especially on price, decline rates, and technical and taxation developments. According to preliminary data, Russia’s supply averaged 10.33 mb/d during the first seven months of the year, constituting an increase of 0.10 mb/d on the same period of 2011. On a quarterly basis, it is seen to average10.34 mb/d, 10.32 mb/d, 10.34 mb/d and 10.36 mb/d respectively.