Goldman Sachs: "petróleo russo incólume às sanções dos EUA, pois produz a custo baixíssimo".
However, Goldman Sachs prefers facts in its analysis of the Russian oil sector and concludes, investor concerns about the health of Russia's oil industry should remain more myth than reality. Via Goldman Sachs, Geydar Mamedov discusses myths and realities in the outlook for Russia's oil sector.
There are increasing concerns among investors that lower oil prices might hit Russian crude production and materially worsen Russian oil companies' financial position. Where are the myths and realities in this narrative? While refining segment margins will narrow, low upstream sensitivity to changes in the oil prices means that, if anything, Russian oil production should grow. And Russian oil companies' strong financial position makes them capable of navigating the oil price downturn - even in the face of sanctions limiting their access to external funding.
Myth: Lower oil prices mean lower production
Two factors contribute to the low sensitivity of Russian upstream cash flow to oil prices. The first is upstream industry taxation: the per-barrel tax rate decreases as oil prices fall, shifting most of the upside/downside due to changes in the oil price from the oil producers to the state. The second factor is a ruble-denominated cost structure. Russian oil producers' opex and capex mainly consist of ruble-denominated contracts, as the services industry is localized. These factors offset the negative impact of oil price declines on upstream earnings.
Effectively, at US$110/bbl oil and 33 RUB/USD, Russian upstream free cash flow (FCF) for the companies we cover is roughly the same as under US$60 oil and 60 RUB/USD. Hence, we do not expect to see a slowdown in upstream activity. Moreover, the Russian government is likely to incentivize output growth in order to mitigate the impact of lower oil prices on budget revenues. Given that Russia has one of the lowest cash costs of production in the world, it would make sense in the current oil price environment for Russia to maintain its market share. We therefore expect production to reach 532 million tonnes in 2015 from 527 in 2014.
