UPDATE 2-Russia sets monthly oil output record in August

* August oil output 9.97 mln barrels per day

* Up 0.6 percent month-on-month, 1.5 percent year-on-year

* Launch of Vankor field boosts production

* Rising output frustrates OPEC members - analyst

* Natural gas production up 4.7 pct from July

(Adds analyst quotes, background)

By Robin Paxton and Gleb Gorodyankin

MOSCOW, Sept 2 (Reuters) - Russian oil output hit a record monthly high in August, nearing 10 million barrels per day, as the world’s second-largest crude exporter launched a major new field in the Arctic and grabbed more market share from OPEC.

Russia produced 9.97 million barrels per day in August, up 0.6 percent from 9.91 million bpd in July and 1.5 percent higher than the 9.82 million bpd produced in August 2008. Natural gas production also recovered from its lows on improved demand. “There is a huge amount of frustration within OPEC that Russia has taken advantage of OPEC’s cuts over the last year and has gained market share,” said Chris Weafer, chief strategist at UralSib investment bank.

Russian oil output has recovered in 2009 after it fell last year for the first time in a decade. After flirting with OPEC when a barrel of oil cost less than $40, Moscow has set a course on raising production to bolster its recession-hit economy.

State-run Rosneft ROSN.MM, the country's biggest oil firm, this month launched its Vankor oilfield in the Arctic, which is destined to become a major supplier to China. [ID:nLL714287]

Energy Ministry data showed Rosneft’s oil output in August rose to 2.39 million barrels per day (bpd), a 5.5 percent, or 123,700 bpd, increase on July production.

Vankor will supply Rosneft with 25.5 million tonnes, or 510,000 bpd, when it reaches peak production in 2014. This is equivalent to nearly one-quarter of the firm’s output last year.

Alfa-Bank senior oil and gas analyst Chirvani Abdoullaev said Vankor could be producing 220,000 bpd by the end of 2009, enough to ensure that Russian output rises this year.

Rosneft is not alone in having launched new fields. LUKOIL LKOH.MM, its closest peer, began production at the South Khylchuyu deposit and TNK-BP TNBPI.RTS has started the Uvat, Kammenoye and Verkhnechonskoye projects in the last year.

LUKOIL produced 1.86 million bpd of crude in August, up by 0.2 percent versus July, while TNK-BP’s output rose 2.2 percent month-on-month, the Energy Ministry data showed.

August oil production by Russia's fourth-largest oil producer, Surgut SNGS.MM, fell by 3.1 percent versus July.


Russia’s August output surpassed the last monthly record of 9.93 million bpd, which the country achieved in October 2007.

Analysts expect rising monthly production to extend into a small full-year increase, although output will stagnate over the next few years due to a lack of investment in new fields and limited export capacity.

“Big fields take 10 years to develop,” said Russian oil analyst Oswald Clint at Sanford Bernstein in London.

“Vankor say they will do 250,000 bpd next year, but unless you’re bringing on very sizeable fields every year, the 5 percent decline rate in Western Siberia will take that out.”

This year’s increase, however, has helped Moscow profit from a recovery in oil prices brought about in part by output cuts from the Organisation of the Petroleum Exporting Countries.

“Russia is at least $22 billion better off because of OPEC action,” Weafer said, a number derived from the $15 difference between an oil price of $40 a barrel in January and its year-to-date average, multiplied by Russia’s daily 7 million bpd of crude and refined product exports in the year so far.

Russia’s natural gas production, which had been falling from the beginning of 2009 as demand plunged in Europe and at home, rose 4.7 percent from July to 1.40 billion cubic metres per day.

Production was still 10 percent lower than in August 2008.

Russian gas export monopoly Gazprom GAZP.MM increased production to 1.08 billion cubic metres (bcm) per day, up 4.3 percent from 1.04 bcm per day in July. (Additional reporting and writing by Dmitry Zhdannikov in Moscow and Chris Baldwin in London; Editing by Keiron Henderson)