Monthly update. Last update - January 2021.
According to the OPEC report of January 2021, global oil demand is expected to recover by an average of 5.9 million barrels per day in 2021. In the OECD countries, oil consumption is estimated to increase by 2.6 million barrels per day.
In non-OECD countries, demand is expected to increase by 3.3 million barrels per day year-on-year due to China and a revival in economic activity in India and other Asian countries.
Forecast for Russia
The specifics of the company's activities depend on the trends of the oil refining market and the cost of a barrel of oil. Oil production in Russia in 2020 fell almost to the level of a decade ago, production volumes decreased by 8.6% compared to 2019 and amounted to 512.68 million tons barrels.
In recent years, a risk factor for the development of oilfield services in Russia has been the restrictions on production volumes under the OPEC+ deal, which led not only to a slowdown in the growth of production and exploration drilling, but also to the forced conservation of part of the well stock.
Due to the reduction in oil production, as well as a decrease in demand for petroleum products due to the introduction of restrictive measures due to Covid, oil and gas companies have reduced investment programs and reduced capital expenditures. At the same time, based on the data for previous periods, with the improvement of the oil market conditions, Capex costs should gradually recover.
If the optimistic scenario is implemented, during the first 2 quarters of 2021, it will be possible to observe a steady reduction in restrictive measures in the world and a recovery in demand for petroleum products, which in turn should help to restore the costs of oil and gas companies for investment programs.
It is expected that Russia will gradually restore production, so in February of this year it is planned to increase production by 65 thousand barrels, in March-by another 65 thousand barrels per day. Thus, the growth will be + 130 thousand barrels per day compared to January 2021.
It is predicted that one of the main drivers of the industry's growth in the horizon up to 2030. Along with the development of new fields in Eastern Siberia and the Republic of Sakha will be drilling in depleted fields in Western Siberia in order to contain the decline in production on them, as well as drilling the underlying productive horizons and the search for missed deposits . Thus, one of the main end customers of the equipment and components supplied by the company are LLC "Irkutsk Oil Company" and JSC "Siberian Service Company", which carry out activities for the development and development of deposits in this region.
The largest share in the structure of the oilfield services market of the Russian Federation is occupied by drilling exploration and production wells of various depths and diameters and methods of operation. Production drilling is the largest segment (US $ 15.3 billion in 2019) and accounts for more than half of the Russian oilfield services market.
The data of the chart shows that with the decline in oil prices, the trend of growth in the volume of production drilling continues. According to operational data for November 2020, “Rosneft” increased its penetration by 16% (to more than 3 million meters) in the 3rd quarter of 2020. According to the results of 9 months of 2020, the growth of the penetration rate in the operational drilling of “Rosneft” amounted to 1.2%, the share of its own drilling service in the total volume of drilling is maintained at the level of at least 50 %, the number of newly commissioned wells amounted to 1.8 thousand units.
One of the trends in the development of the Russian oil and gas sector is the tendency to increase operating expenses relative to capital expenditures:
capital expenses 2019
operating expenses 2019
capital expenses 2020
operating expenses 2020
In Russia, with the fund of 145 thousand operating production wells, 59.6 thousand capital and 87.6 thousand ongoing well repairs were carried out in 2019. Deloitte estimates that the average annual growth in the number of operations in 2020-2023 will be 4%.
In accordance with the Energy Strategy of the Russian Federation for the period up to 2035 (Decree of the Government of the Russian Federation No. 1523-r of 09.06.2020), the development of the domestic market of high-tech service engineering services is defined as one of the key tasks of the Russian oil industry. The effectiveness of the Russian oilfield service depends on the modernization and overcoming the technical and technological backlog of the drilling service, eliminating the moral and physical wear and tear of the drilling rig fleet and accelerating the pace of updating the material and technical base.
Thus, the current main trends in the development of the Russian oil sector allow the company to count on an increase in business volumes not only by increasing the number of deliveries of power plants, but also by increasing the volume of deliveries of components and spare parts to extend the operational use of existing equipment, which meets the main objectives of the modernization of the industry.