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UPDATE 2-Foreign-owned projects boost Russian oil output in Sept
October 2, 2014 / 9:31 AM / 3 years ago

UPDATE 2-Foreign-owned projects boost Russian oil output in Sept

* Russian oil output reaches 10.61 mln bpd in September

* Russian gas production up to 1.52 bcm last month

* Sanctions have not hit hydrocarbon output in Russia (Adds detail, analyst comments, references to tables)

By Vladimir Soldatkin

MOSCOW, Oct 2 (Reuters) - Foreign-led projects lifted Russian oil output last month to within reach of a post-Soviet record, showing the potential in the country’s existing fields, which are largely unaffected by Western sanctions over Ukraine.

Output of oil and gas condensate in the world’s largest producer rose 0.9 percent to 10.61 million barrels per day (bpd) last month from August, a touch under the post-Soviet record-high of 10.63 million bpd reached in December, Energy Ministry data showed on Thursday.

Oil production rose in January-September by 0.7 percent year-on-year, showing that Moscow has not curbed its output to prop up the oil price, which reached a 27-month low under $93 per barrel on Thursday, due to weak demand in China in Europe.

A price below $100 marks the pain threshold for Russia’s faltering economy. Russia’s central bank said on Wednesday it is working on measures to support the sanctions-hit economy should oil prices fall by as much as a third or more.

The United States and European Union have imposed wide-ranging sanctions on Moscow for its role in the Ukraine crisis, including freezing access to foreign technology and banning Western firms from cooperating in Arctic, shale and deep-water drilling. This targets mostly future oil output.

However, Russia provides around a third of the European Union’s oil and gas, and many governments in the bloc are wary of antagonising Russia further.

“It is unlikely that we’ll see any impact on Russian oil production from the sanctions by the year-end,” Alexander Kornilov from Alfa bank said, although that could change if new sanctions are applied next year.

The EU decided on Tuesday to keep in place a package of sanctions against Russia despite what it called “encouraging developments” on the ground after a ceasefire deal.

OPEC secretary general Abdullah al-Badri said last month he expected the group to lower its oil output target when it meets in late November, which would be its first formal output cut since the 2008 financial crisis.

Russian Energy Minister Alexander Novak met al-Badri last month, although the two did not discuss the oil price.

In tonnes, Russian oil output was 43.411 million in September versus 44.472 million in August, which has one more day than September.

PSA PRODUCTION

Oil output under production sharing agreements (PSA), designed in the 1990s to encourage investment by foreign oil companies, jumped by 24 percent in September to almost 1.23 million tonnes (298,844 bpd).

The ministry does not provide a breakdown of the data for the projects, which include Sakhalin-1 of Rosneft, ExxonMobil , ONGC and Sodeco; Sakhalin-2 involving Gazprom , Shell, Mitsui, and Mitsubishi ; and Kharyaga with Total, Statoil and Zarubezhneft. Sanctions do not affect these projects.

Small firms, which the ministry defines as “other producers”, increased their oil production by 1.5 percent, while output at Rosneft, the world’s top publicly traded oil company, was flat at 3.8 million bpd.

Russian daily gas output rose to 1.52 billion cubic metres (bcm) per day last month from 1.38 bcm in August.

Natural gas production at Gazprom, the world’s largest gas producer, jumped 14 percent from August to 968 million cubic metres a day on an increase in seasonal demand.

Gazprom’s production for January-September fell by 9 percent to 311.6 bcm. Analysts expect that its output will hit an all-time low of around 450 bcm this year after it halted gas supplies to Ukraine in June over a pricing dispute and debts. (Reporting by Lidia Kelly and Vladimir Soldatkin; Additional reporting by Olesya Astakhova; editing by Elizabeth Piper and Susan Thomas)

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