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Russian oil output highest since March, tops cap target

Russian oil production in August rose to 11.294 million barrels per day (bpd), topping the rate Moscow has pledged to cap output at under a pact with other producers and hitting its highest since March, a data showed on Monday.

Energy ministry data showed oil output rose to 47.763 million tonnes in August from 47.149 million in July.

Pipeline exports stood at 4.610 million bpd last month vs 4.609 million bpd in July.

The production increase follows a report that OPEC cranked up its output in August, for the first month this year, as higher supply from Iraq and Nigeria outweighed restraint by top exporter Saudi Arabia and losses caused by U.S. sanctions on Iran.

Energy producer Rosneft contributed the most to Russia’s overall output increase, boosting its production by 5 percent from July to almost 4 million bpd.

The company raised output at its main production unit, Yuganskneftegaz by 10 percent last month after it suffered from contamination oil crisis.

At the same time, output at Gazprom Neft, the oil arm of gas producer Gazprom, fell by 4.1 percent to 814,000 bpd as it shut down its Arctic offshore oilfield for maintenance.

Under a deal agreed between OPEC member states and other oil producers, Russia has agreed to reduce output by 228,000 bpd from an October 2018 baseline.

According to Reuters calculations, which use a tonnes/barrel ratio of 7.33, that indicates it should cap output at around 11.17-11.18 million bpd.

Energy Minister Alexander Novak admitted last week that oil output in August was slightly higher than levels agreed under a global deal, but Moscow was still aiming to fully comply with the agreement.

Russia produced 11.15 million bpd in July, when it was constrained by the contaminated oil crisis. In August it produced its highest monthly average since March, when it reached 11.30 million bpd.

In July, the Organization of the Petroleum Exporting Countries and its allies, including Russia, agreed to extend oil supply cuts until March 2020 in hopes of supporting prices amid a weakening global economy and soaring U.S. output.

Russia’s natural gas production rose to 55.48 billion cubic metres (bcm) last month, or 1.79 bcm a day, versus 54.66 bcm in July.
Source: Reuters (Reporting by Vladimir Soldatkin; editing by Jason Neely)

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