ROSNEFT & EXXON: LNG
REUTERS. Russia's Rosneft, said on Tuesday it was on track to start production at its first liquefied natural (LNG) gas plant in the country's far east in 2018-2019, despite East-West tension over Ukraine.
The world's largest listed oil company by output signalled its partnership with U.S. ExxonMobil for building the plant, which will have an initial annual capacity of 5 million tonnes, would not be affected by the standoff.
"The project is fully targeting Asia-Pacific markets. At the moment, the project's implementation is going according to the plans that were announced," Rosneft, headed by Igor Sechin, a long-standing ally of Russian President Vladimir Putin, said in written replies to Reuters.
"The launch is planned for 2018-2019," said the state-controlled company, almost 20 percent owned by British oil major BP.
Rosneft said current LNG prices in Asia, at over $15 per million British thermal units (MMBtu), would enable it to successfully carry out its LNG project, in which the final investment decision is expected next year.
Russia is entering the global LNG game at a time when Qatar, Australia and others are boosting their presence on the market, and prices are being driven by growing demand in the Asia-Pacific region.
Russia has only one LNG plant, which is controlled by state-run top natural gas producer, Gazprom, and is on the Pacific island of Sakhalin. It has an annual capacity of around 10 million tonnes.
Tensions over Russia's annexation of Crimea from Ukraine, following a referendum the West says was a sham, have pushed East-West to their lowest level since the Cold War.
The United States and the European Union have imposed sanctions, mainly on Russian individuals, and Moscow has responded in kind.
Rosneft is one of two Russian companies that have won the right to ship LNG out of Russia since the Kremlin decided to end Gazprom's monopoly. The other is Novatek, which is currently Russia's number two gas producer and is co-owned by another Putin ally, Gennady Timchenko.
Timchenko is one of the Russian individuals targeted by Western sanctions over the Ukraine crisis but Sechin has not been targeted, nor has Gazprom's chief executive, Alexei Miller.
The tensions have spurred U.S. officials to press Washington to speed up exports of U.S. natural gas to Europe to help reduce the continent's reliance on Russian gas, which accounts for a third of the EU's total consumption.
Rosneft said it did not expect all LNG plants announced by Washington to come on stream, saying exports could hit domestic gas prices and curb economic growth in the United States and competition would come from Canada, with its own LNG plans.
"That said, a scenario when the bulk of the projects announced are actually launched seems unlikely," Rosneft said.
Russia largely underestimated the shale gas revolution in the United States which turned the country into the world's leading gas producer, enabling it to overtake Moscow.
The United States is now set to become the world's largest oil producer, thanks to increase in shale oil output, and Russia is now testing its own unconventional oil prospects in western Siberia.
Last year, Rosneft's gas production reached 42 billion cubic metres (bcm), thanks to acquisitions. The company plans to increase gas output to 100 bcm by 2020 in a move to become Russia's second biggest gas producer after Gazprom.
On Tuesday, it said its gas output was expected to rise to around 55 bcm this year and over 63 bcm next year. Gazprom produced 479 bcm last year, or 73 percent of the Russian total.
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U.S. FRB - Industrial production edged up 0.1 percent in July after rising at an average pace of 0.5 percent over the previous five months. Manufacturing production increased 0.3 percent, the output of utilities moved down 0.5 percent, and, after posting five consecutive months of growth, the index for mining declined 0.3 percent. At 108.0 percent of its 2012 average, total industrial production was 4.2 percent higher in July than it was a year earlier. Capacity utilization for the industrial sector was unchanged in July at 78.1 percent, a rate that is 1.7 percentage points below its long-run (1972–2017) average.
NPD - Preliminary production figures for July 2018 show an average daily production of 1 911 000 barrels of oil, NGL and condensate, which is an increase of 64 000 barrels per day compared to June.
GAZPROM NEFT - For the first six months of 2018 Gazprom Neft achieved revenue** growth of 24.4% year-on-year, at one trillion, 137.7 billion rubles (RUB1,137,700,000,000). The Company achieved a 49.8% year-on-year increase in adjusted EBITDA, to RUB368.2 billion. This performance reflected positive market conditions for oil and oil products, production growth at the Company’s new projects, and effective management initiatives. Net profit attributable to Gazprom Neft PJSC shareholders grew 49.6% year on year, to RUB166.4 billion. Growth in the Company’s operating cash flow, as well as the completion of key infrastructure investments at new upstream projects, delivered positive free cash flow of RUB47.5 billion for 1H 2018.
REUTERS - Front-month Brent crude oil futures LCOc1 were at $72.34 per barrel at 0648 GMT, down by 12 cents, or 0.2 percent, from their last close. U.S. West Texas Intermediate (WTI) crude futures CLc1 were down 23 cents, or 0.3 percent, at $66.81 per barrel.