2.2. Sectoral Forecast until 2024The section has been prepared according to the data of the Ministry of Economic Development of the Russian Federation and the Ministry of Energy of the Russian Federation.106

Macroeconomic Indicators of the Russian Federation

According to the Forecast of Social and Economic Development of the Russian Federation up to 2024 by the Ministry of Economic Development of the Russian Federation dated September 2019, the inflation rate at the end of 2020 was projected at 3%. Thereafter, inflation was projected to return to the target level of 4% in 2021-2024.

In 2020, the GDP growth rate was projected at 1.7%. At the same time, increased exports of non-energy products was expected to outpace the growth rate. The key economic objective for the period until 2024 was to accelerate the growth of the Russian economy to the level of more than 3%.

According to the data updated in April 2020 by the Ministry of Economic Development of Russia, in Q1 2020 there was an acceleration of inflation rates due to the weakening of the ruble and increased demand in some segments of the consumer market.

In February 2020, according to the estimates of the Ministry of Economic Development of Russia, GDP growth also accelerated to 2.9% YoY after 1.7% YoY in January. Since the beginning of the year, the GDP growth rate has been estimated at 2.3% YoY. At the same time, according to the estimates of the Ministry of Economic Development of Russia, in February 2020, the situation in the world markets changed due to the negative consequences of the new coronavirus infection for the global economy, which required revision of forecasts of Russia’s social and economic development, which is impossible to assess at the time of formation of this document.

World Raw Materials Market

According to the Forecast of Social and Economic Development of the Russian Federation for the period up to 2024 prepared by the Ministry of Economic Development of the Russian Federation in September 2019, the growth rate of the world economy was projected to decrease to 2.7% by 2024 vs 3.6% in 2018, which should have had a deterrent effect on oil prices. Under such conditions, it was forecasted that the price of Urals oil would gradually drop to USD 53/bbl. in 2024 vs USD 70/bbl. in 2018.

In early 2020, the spread of the new coronavirus infection around the world led to a sharp decline in economic activity and a fall in demand for crude oil. The reduction in demand for crude amounted to about 15-20 million barrels per day, which is about 20% of the total oil production in the world. In early April 2020, the oil price fell to USD 25-30/bbl.

Oil Production in the Russian Federation

According to the Forecast of Social and Economic Development of the Russian Federation for the period up to 2024 prepared by the Ministry of Economic Development of the Russian Federation in September 2019, oil production in the Russian Federation was projected at 560-562 million tonnes per year in the period up to 2024. Oil export to non-CIS markets was also projected to grow to 245.2 million tonnes by 2024 (242.2 million tonnes by 2022), mainly due to increased deliveries to Asia and the Pacific countries. However, achievement of the specified levels of oil production and export depends on macroeconomic conditions, efficiency of the import substitution process and development of domestic production in related industries.

The reduction in demand for crude in early 2020 required measures to reduce supply on the market in order to stabilise the global oil market.

To this end, in April 2020, 23 countries, including Russia, agreed on joint actions to voluntarily limit oil production within two years. According to the agreement, the reduction in global oil production in May-June 2020 will total 9.7 million barrels per day (about 10% of global production). Then oil production will be restored; from July to December 2020, the reduction will amount 7.7 million barrels per day, and from January 2021 to April 2022 — 5.7 million barrels per day.

Production of Petroleum Products in the Russian Federation

The depth of oil refining in the Russian Federation amounted 83.4% in the beginning of 2019, which is still lagging behind the world level (89-99%). In 2019, motor petrol production stood at 40.2 million tonnes, diesel fuel production amounted to 78.4 million tonnes, and fuel oil production to 45.7 million tonnes.

The following is expected by the end of 2024:
  • an increase in motor petrol production to 46.2 million tonnes;
  • an increase in diesel fuel production to 85.3 million tonnes;
  • an increase in aviation kerosene production to 16.8 million tonnes;
  • a reduction of fuel oil production to 34.0 million tonnes.

Tariff Formation at Companies of Infrastructure Sector

It is planned to maintain the tariff policy restricting the growth of regulated tariffs and prices at infrastructure companies, not allowing them to go beyond the anticipated inflation level, during the forecast period. In order to provide a legislative framework for the approaches and methods of regulation that are being implemented, systemic changes in the basis of state regulation of prices and tariffs are being developed; the changes are to establish unified principles of pricing, guarantee of return and return on investment, as well as to make reference costs the prioritised method of reducing costs. There are also plans to adopt a package of regulatory acts on consideration, technical and price audit of investment programmes of infrastructure monopolies. This will launch legal mechanisms to improve efficiency and transparency of the process of consideration and approval of investment programmes within systemically important infrastructure companies and ensure synchronisation of this process with long-term tariff parameters.

Outlook for Pipeline Transport in Line with Market Trends

Analysis of the key trends contained in the industry forecast allows for the following to be concluded on Transneft’s mid-term position in the field of oil and petroleum products transportation.