Russia Sept oil output hits record 10 million bpd

By Robin Paxton

MOSCOW (Reuters) - Russia's monthly oil production exceeded 10 million barrels per day in September for the first time, nearly 25 percent more than the total pumped by nearest rival Saudi Arabia as OPEC persists with output cuts.

Russia, now the world's largest oil producer, pumped 10.01 million barrels per day last month, up 0.4 percent from the 9.97 million bpd produced in August, which was also a record high at the time, Energy Ministry data released on Friday showed.

Russian production has recovered in 2009 after suffering its first drop in a decade last year. The latest spike in output follows the August launch by state-controlled industry leader Rosneft of its massive Vankor operation in the Arctic.

But analysts said Russia's position as top producer might be temporary, as mature deposits in western Siberia run dry quicker than the country's oil majors can replace them with new finds.

"The pick-up seen today is the result of prior years' investment," said Chirvani Abdoullaev, senior oil and gas analyst at Alfa-Bank. "It's only sustainable until new fields reach a plateau."

Russia has emerged as the undisputed leader in world oil production this year after the Organization of the Petroleum Exporting Countries agreed to cut supply by 4.2 million bpd from September 2008 in a bid to prop up falling oil prices.

OPEC has kept official output targets unchanged at meetings since, most recently on September 9. Oil prices have risen over 50 percent this year to trade just shy of $70 a barrel.

Russia's oil-heavy economy, in its first recession for a decade, has benefited from the recovery in prices. The country has grabbed market share from OPEC and analysts have estimated Moscow has gained over $20 billion from the grouping's cuts.

This has caused frustration within OPEC, particularly after Moscow rekindled a courtship with the organization at the end of last year, when a barrel of oil cost less than $40. While Russian output has grown, Saudi Arabia, the largest producer within OPEC by far, produced 8.1 million bpd in September, largely flat from the previous month.

FAIR PRICE

President Dmitry Medvedev said on Thursday that $80 to $90 a barrel would be a fair price for oil in the current economic climate. Crude traded at a record $147.27 a barrel in July 2008.

"Russia has no interest in an endlessly high oil price. If it were to cost that much, we'd never change the structure of our economy," Medvedev said at a meeting on the farm industry.

"We haven't done anything in the last 10 years because oil kept rushing higher and higher," he said. "When the collapse came, we felt it harder than other countries."

Before this August, Russia's previous monthly record for oil production was the 9.93 million bpd achieved in October 2007.

Rosneft led September's record haul, producing 2.40 million bpd, up from 2.39 million bpd in August. LUKOIL, its closest peer, produced 1.84 million bpd, ministry data showed.