Analytical Center experts prepared the Russian Fuel and Energy Sector 2016 data book. In the past year, the Russian fuel and energy sector was subject to a number of challenges, such as the continuing economic downturn, financial and technological sanctions connected to the oil and gas industry, low and highly volatile oil and gas prices. An increase in external demand for Russian oil, gas and coal, as well as increasing export prices for coal, supported the fuel and energy sector. Energy consumption in Russia increased slightly due to the Russian economy getting out of recession in the second half of the year.
The slow growth of the global economy, which fell from 3.4 % to 3.1 % in 2015, was a constraint affecting energy markets development in 2016. In general, developed countries have negatively affected economic trends in 2016. However, the BRICS countries, the leaders of the developing world, also continued to experience instability.
The production of gas condensate and oil in Russia increased by 15.5 million tons (+2.9 %) compared to 2015, while oil exports increased by 10.2 million tons (+4.2 %). Production growth was mainly provided by the shelf projects running in the Yamalo-Nenets Autonomous Okrug and Eastern Siberia. As a result, Russia's share in the world crude oil production increased from 11.5 % in 2015 to 11.7 % in 2016. The realization of the so-called "big tax maneuver" in the oil industry led to some changes in the structure of production and export of petroleum products, i.e. the share of fuel oil decreased as a result of its export duty rate growth. The increase in the production of Euro 5 standard fuel continued.
After a decline in 2015, gas production in Russia increased by 0.9 %. This was achieved primarily due to the record gas exports to the EU countries experiencing an increase in demand for gas. In general, Russia continues to maintain a strong position in foreign gas markets, the competition keeps growing, mainly due to the expected increase in global LNG trade.
Against the backdrop of the continuing decrease in the world coal production in 2016, the Russian coal production has increased (+3.1 % by 2015). Once again, the main driver of growth were exports (+9.8 %) with an increased engagement of the East. Coal consumption in Russia in 2016 was back to a downtrend (-5.3 %). After a long decline, started in 2011, the world prices for coal began to recover.
Russia faced a decrease in production and processing of petrochemical raw materials. In the domestic market, there was a slowdown in import substitution of petrochemical products against the backdrop of growing consumption.
In 2016, there was an increase in electricity consumption and production in Russia, one reason being the gradual recovery of industrial production. The main increase in production was provided by hydroelectric power plants.
For more information see the Russian Fuel and Energy Sector 2016 data book.