x Abu Dhabi, UAE Thursday 20 July 2017

Russian oil production levels close to record

Russian oil output set to rise amid uncertainties about Middle East supplies.

Russian oil production is near the post-Soviet record set last October, and could soon overtake it.

Output of 10.23 million barrels per day (bpd) last month was 0.2 per cent higher than in January and 1.5 per cent higher than in February last year, according to the latest government data.

That approaches the 10.27 million bpd pumped in October, a month in which Russian production is less prone to weather-related disruptions.

Russian crude exports last month rose 2 per cent to 5.28 million bpd, helping to offset the recent decline in Libyan output.

"Russia has been posting new [post-Soviet] production records for the past two years," said Sergey Lukianov, the business development manager of the sales and logistics division of TNK-BP, the third-largest Russian oil producer.

"We expect this growth will continue," Mr Lukianov told an Argus oil market conference in Dubai on Monday.

A recent Carnegie Foundation report said Russia was "vigorously expanding its oil export capacity". The country passed a "milestone" last September, when the Russian president Dmitry Medvedev and his Chinese counterpart Hu Jintao inaugurated the Chinese branch of the East Siberian-Pacific Ocean Pipeline, which pumps Russian crude to the Pacific coast.

Another pipeline project, the Baltic Pipeline System II project, has eliminated a previous bottleneck facing Russian oil exports to Europe.

"Russia is emerging as a swing supplier for Europe and the Far East because of the emergence of spare export capacity east and west," Mr Lukianov said. "This has already allowed Russia to take advantage of Opec production cuts."

He estimated that by 2015, Russia's oil pipeline network would have 113 million tonnes a year (2.27 million bpd) of spare export capacity.

 

tcarlisle@thenational.ae