Russia Gas Output Down 13% in First Half After EU Exports Cut

(Bloomberg) -- Russia’s natural gas production in the first half was almost 13% lower than a year earlier following the Kremlin’s decision to halt pipeline exports to many countries in Europe, its biggest market.

Russian producers pumped 319.3 billion cubic meters of gas in the first half of the year, according to industry data seen by Bloomberg. The country started to significantly reduce gas output last year after halting most pipeline exports to Europe amid the Kremlin’s standoff with the west over the invasion of Ukraine. 

Russia produced 42.8 billion cubic meters of gas in June, down 8.6% from the same month a year earlier. The magnitude of the year-on-year drop is gradually narrowing because at this point in 2022 the Kremlin had already begun to constrain exports. The figures exclude volumes that were burned off, or flared, in line with the way the Energy Ministry has historically calculated output.

Gazprom PJSC, which halted regular publication of its operational data earlier this year, accounts for the bulk of the first-half drop, The industry data don’t include a specific figure for the company, but the combined production of the category in which it sits — where Gazprom is by far the largest producer — fell more than 20% to 201.8 billion cubic meters

Novatek PJSC, the nation’s second-biggest gas producer which mainly supplies liquefied natural gas, reduced its output by 1.9% to 39.8 billion cubic meters in the period. The European Union, which used to receive some 40% of its gas from Russia, continues to import Russian LNG.

Rosneft PJSC, which doesn’t export any gas, increased its production by 44% to 32.7 billion cubic meters, Bloomberg calculations show. That follows the ramp-up of the Kharampur and Rospan projects, but is still a relatively small share of the total domestic consumption.

The drop in production and overseas shipments led to a 46% decline in Russia’s budget revenue from the main gas taxes in the first half, compared with a year earlier, according to Bloomberg calculations based on Finance Ministry data. The mineral extraction tax and export duty reached 835.5 billion rubles ($9.3 billion) over the period.

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