Russia has the largest oil & gas reserves in the world, in addition to being the world’s second largest oil producer, with a 13 percent share of the world’s total oil output. In December 2016, Russia ranked first place in the world for oil production. The upstream oil industry is still the backbone of the economy and one of its main sources of investment resources, which affects Russia’s international payments and exchange rate.
In 2016, oil output in Russia reached 547.5 million tonnes (+2.5% yoy), according to Russia’s Ministry of Energy. This increase was maintained by the development of new oil production centres in Eastern Siberia and the growth of crude oil exports to Asia, primarily to China, where demand for Russian oil is increasing.
Russia has the largest oil pipeline system in the world – more than 72 thousand kilometres of oil pipeline and around 500 installed pump stations. The existing trunk pipeline system transports over 90 percent of the crude oil produced in Russia.
Transneft, the only oil pipeline operator in Russia, increased its oil exports by 2.7 percent yoy to 235.8 million tonnes in 2016.
The existing pipeline system is currently being expanded through the following projects:
Transneft’s total capital expenditure for 2016 is estimated at Rub 337.5 billion.
There are 40 oil refineries in Russia with a total crude oil distillation capacity of 5.5 million barrels per day. Rosneft, the leading Russian oil company, is the largest refinery operator and owns 9 major refineries in Russia. LUKOIL, with 4 major refineries, is the second-largest refinery operator in Russia.
In Russia, a lot of refineries are out-dated and are not able manufacture their main products – light oil products with a high level of refining depth, i.e. petrol and diesel – at a high quality level. Previous changes in taxes have encouraged companies with modest success to invest in the modernisation of refineries to produce more high quality products, such as diesel and petrol. Tax changes introduced in 2015 and the low global crude oil price will continue to stimulate refineries to modernise their production facilities more intensively.
Growth in the oil refinery industry is likely to be driven by several new projects:
Isomerisation process units:
Alkylation process units:
Diesel hydrotreating process units:
Reforming process units:
Catcracked gasoline hydrotreating process units:
Gazprom is virtually the sole owner of all natural gas pipelines in Russia.
In 2016, the Russian natural gas transportation system included more than 170 thousand kilometres of high-pressure pipelines with 250 compressor stations (3,825 gas-pumping units) and 26 underground natural gas storage facilities. The majority of Russia’s natural gas pipelines were constructed during the Soviet era and around 75 percent of the system is more than 20 years old.
Since the late 2000s, Gazprom has built major new pipelines for the transportation of natural gas from new gas fields, including fields in Yamal and Eastern Siberia, as well as for new export routes, including exports to China and pipelines to Europe in order to avoid Ukraine.
The Unified Gas Supply (UGS) system includes domestic pipelines and the domestic part of export pipelines in Western Russia; however, it does not include pipelines in Eastern Russia. In 2007, the Russian government delegated Gazprom with the task of establish the Eastern Gas Programme (EGP) to expand gas infrastructure in Eastern Siberia and the Russian Far East. The backbone of the EGP is the “Power of Siberia” pipeline, which is currently under construction.
The “Power of Siberia” pipeline will run nearly 4,000 kilometres through 5 Russian regions: the Irkutsk region, the Republic of Sakha (Yakutia), the Amur region, the Jewish Autonomous region and the Khabarovsk territory, and will have an annual capacity of 38 billion cubic metres of gas.
Gazprom approved a Rub 911 billion investment programme for 2017.
|Pipeline||Volume, bcm||Length, km||Compressors, MW||Construction|
|Ukhta-Torhzok, first and second lines||90.0||2,343||1,430||2014-2019|
|Power of Siberia||61.0||3,056||1,330||2014-2019|