* Russian oil production hit 10.5 mln bpd in 2013
* Energy Ministry, analysts expect oil output at least to stay unchanged
* Russia offered tax breaks, hoping for renaissance
* BP sees Russia, South America next to benefit from shale oil boom
By Katya Golubkova and Olesya Astakhova
MOSCOW, Jan 21 Russia will at least keep its oil production at
record-high levels this year thanks to strong performance at new fields but
there is little chance of significant further gains in output, analysts and
Russia, the world's top oil producer, relies on oil export revenues to fill
state coffers and keep its economy growing. Output rose 1.4 percent last year to
a post-Soviet high of 10.51 million barrels per day (bpd) thanks to greenfields
launched a couple of years ago.
But the fields now ramping up production, such as Rosneft's Vankor
deposit in Eastern Siberia, were discovered by Soviet geologists. Newer
discoveries are years away from coming on stream and that will constrain growth
And, although Russia is the world's second-largest oil exporter behind Saudi
Arabia, its crude surplus is being squeezed by a massive round of refinery
upgrades that will cut oil flows abroad.
The Energy Ministry predicts that domestic oil production will be at least
unchanged this year, with so-called "old greenfields" such as Vankor or
Surgutneftegas's Talakan fields helping offset declines at older
Russia has three times more oil in the ground than the United States, but it
stands to lose its lead in production as soon as next year due to the U.S. shale
energy revolution, the International Energy Agency predicts.
Reflecting the lack of dynamism, state oil firm Rosneft said it replaced 180
percent of its production in reserves last year. Yet Russia's largest oil
producer plans annual output growth of only 1 percent in the years to come.
Alexander Kornilov, an analyst with Alfa Bank, expects output to add around
1 percent in 2014, thanks to growth at Rosneft's Vankor and Uvat fields, Talakan
and Lukoil's Caspian Korchagin field.
Three large deposits launched last year, Trebs and Titov in West Siberia,
Srednebotuobinskoe in Eastern Siberia and the Arctic Prirazlomnoye - all Soviet
discoveries - are expected to add a total of around 16 million tonnes (300,000
bpd) to overall production towards the end of this decade.
First oil at all three deposits was delayed and peak production targets
revised, making long-term forecasts now less reliable, analysts say. Still, they
will support output.
"Rosneft plans to add around 1 percent to its output. Given that it is the
country's largest oil company, Russia will also see moderate growth," said
Andrey Polischuk at Raiffeisenbank.
Surgutneftegas plans to keep its oil output stable at around 1.2 million bpd
this year, the company told Reuters, while Lukoil and Gazprom Neft
declined to comment.
Russia's next major Arctic field, Gazprom Neft's Novoportovskoye, is
expected to pump its first oil this year at a rate of up to 10,000 bpd, rising
sharply by 2020.
Other major new fields such as Yurubcheno-Tokhomskoye or Kyumbinskoe are
expected to start operations later this decade.
West Siberian brownfields still account for around 90 percent of Russian
output but are likely to start burning cash in just four years due to rising
costs as deposits deplete, Renaissance Capital predicts.
"Dynamics at brownfields may be worse than expected given still-high
taxation and a lack of stimulus to make full use of oil-recovery methods," said
Denis Borisov, director at Ernst & Young's oil and gas centre in Moscow.
The oil heartland of West Siberia may yet see a renaissance, as it is
believed to be home to the world's biggest technically recoverable "tight" oil
resources, the U.S. Energy Information Administration estimates.
To stem output declines, Russia has offered tax breaks to boost investment
in new or remote fields, support production from depleted deposits and create
incentives to tap hard-to-recover reserves of tight oil.
Energy Minister Alexander Novak told Reuters last month that breaks should
help Russia keep production at a minimum of 10.1-10.2 million bpd in coming
years and could lead to an increase to 10.8-11.0 million bpd before 2030.
In its annual outlook, oil company BP said Russia and South America
would join the United States in tapping shale oil over the next two decades,
contributing about 1 million bpd of shale oil each by 2035.
"We think that share of tight oil will significantly increase in overall
production but the effect will be seen after five years," Raiffeisenbank's