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The Russian Federation oil and gas midstream market is expected to grow at a CAGR of around 6.5%, during the forecasting period. The primary driver of the market includes the increasing oil and gas activities in the country and the increasing natural gas and crude oil trade with various nations across the world. However, high volatility in crude oil and natural gas prices along with the risks associated with infrastructural developments in oil and gas transportation, storage and LNG terminals construction is likely to hinder the market growth during the forecast period.

  • Transportation is one of the significant segments in Russia’s midstream sector and is likely to dominate the midstream sector during the forecast period.
  • Russia holds a huge potential for increasing its oil and gas production. The country possesses a reserve of around 41 billion tonnes of oil equivalent in its Arctic, far Eastern, and Southern Sea. As of 2019, Rosneft holds 55 licenses for exploration and production in these regions. Production of oil and gas from the regions is likely to create an opportunity for the midstream market to grow in the near future. Furthermore, the country is planning to increase its gas consumption rate in its European part, which is also likely to create an opportunity for the midstream market to grow in the near future.
  • With the increasing natural gas demand across the globe, Russia is planning to increase its export quantity by increasing its LNG terminal capacity, which is likely to drive the market during the forecast period.

Key Market Trends

Transportation as a Significant Segment

  • Globally, pipelines act as a major mode of transportation for crude oil, oil products, and natural gas. In Russia, the natural gas pipeline shares the major market share, with nearly 76% as of 2019.
  • During 2019, Russia has nearly 15186 kilometers (km) of oil and 49711 km of natural gas pipeline. It has been estimated that nearly 1895 km of oil and 1857 km of natural gas pipeline are in various stages of implementation.
  • Russia holds a few prominent and longest oil pipeline in the world. With around 4000 km in length, the Druzhba pipeline travels from the eastern part of European Russia to Ukraine, Belarus, Poland, Hungary, Slovakia, Czech Republic, and Germany. The pipeline has a capacity of around 1.2 to 1.4 million barrels per day.
  • Among the ongoing pipeline projects, the Nord Stream 2 project is a key project, which has been planned to get built from Russia to Europe across the Baltic sea. The project is estimated to be nearly 1200 km and is expected to have nearly 55 billion cubic meters of gas per year. The pipeline is expected to get completed by mid-2020.
  • Russia is planning to lay a pipeline to Pakistan, India, Bangladesh, and China. A feasibility study was expected to get started in the first quarter of 2020. One construction gets started; it is estimated to get completed by 3-4years. Thus, the completion of these pipelines is expected to boost the midstream sector during the forecast period.

Increasing Development of LNG Terminals to Drive the Market

  • LNG terminals are exporting facilities for natural gas, where it gets converted to liquid form. Various gas pipelines and storage facilities are installed to facilitate terminal with natural gas, with the objective of exporting it to various countries.
  • As of 2019, Russia has an LNG terminal capacity of around 27.6 million tonnes per year (MTPA) and is planning to increase its capacity up to 31 MTPA by 2024.
  • During 2018 and 2019, the country has commissioned three LNG terminals, with a cumulative capacity of around 16.5 MTPA. All three terminals were from the Yamal LNG project, each with 5.5 MTPA.
  • Regarding upcoming LNG projects, the country has nearly three LNG projects online. Vysotsk LNG expansion projects to 1.1 MTPA, Portovaya LNG of 2 MTPA, and Yamal LNG T4 of 0.94 MTPA are the key upcoming projects.
  • The country has few proposed LNG terminals projects as well. Arctic LNG-2 is one of the keys proposed LNG project, which is estimated to have around 19.8 MTPA. Thus commissioning of the ongoing and proposed LNG terminal is expected to boost the LNG terminal capacity and would thus expand the midstream sector of the country during the upcoming years.

Competitive Landscape

The Russian Federation oil and gas midstream market is moderately consolidated. Some of the key players in the market include Transneft PJSC, Gazprom PAO, NK Rosneft PAO, Novatek PAO, and Total SA.

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