Russia Monitor is a review of the most important events related to Russian internal and external security, as well as its foreign policies.
Date: 19 August 2020
Lukoil Reduces Hydrocarbon Output
In the first six months of 2020, Lukoil, a Russian top energy producer, said its crude oil figures fell by 3.2 percent and recorded the fall of 14.7 percent in natural gas production. The cut was due to the new OPEC+ agreement and a decrease in gas supply from Uzbekistan to China –– both driven by a negative impact of the Covid-19 pandemic on hydrocarbon demand.
What is to be blamed for the company’s poor performance in the first six months of 2020 are its Q2 2020 figures –– as compared to those recorded in Q2 2019. Between April and June, Lukoil had hydrocarbon output numbers lower by 14.9 percent than in the January-March period. Throughout the second quarter, the firm’s oil production, excluding the West Qurna 2 project in Iraq, totaled an average of around 1.981 million barrels of crude oil equivalent. In the first half of the year, hydrocarbon production dropped year-on-year by 8.4 percent, to 2.155 million barrels per day (bpd). Output cuts arose from the new OPEC+ deal and a drop in gas supply from Uzbekistan to China. The OPEC+ cut deal came into effect on May 1, 2020, with throughput limitations being imposed onto Lukoil’s crude quotas in Russia as well as for some of its hydrocarbon projects abroad. The company’s Q2 2020 crude refining dropped by 10.1 percent, to 19.88 million, on the quarter –– notably in Russia (-12.2 percent) and abroad, albeit slightly (-7.9 percent). Also, a drop in Lukoil’s throughput emerged from reduced hydrocarbon demand in China –– a vital market for the giant’s gas projects in Uzbekistan. Lukoil’s gas output totaled 6.396 billion cubic meters, or bcm, in Q2 2020, down 24 percent on the quarter. Here, there is also a gap between the firm’s projects at home and abroad. But unlike for crude throughput, Lukoil saw its gas figures abroad drop sharply, down 44.2 percent to 2.091 bcm whilst roughly 7.7 percent at home, to 4.305 bcm. In the six months of 2020, gas output averaged 14.808 bcm, down 14.7 percent year-on-year.
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