May 2, 2019 / 10:18 AM / 4 months ago

Russian oil output falls in April but fails to reach reduction target

MOSCOW (Reuters) - Russia’s oil production fell to 11.23 million barrels per day (bpd) in April from 11.3 million bpd in March, but remained above levels targeted in a deal on output cuts by major producers, Energy Ministry data showed on Thursday.

A view shows a well head and a drilling rig in the Yarakta Oil Field, owned by Irkutsk Oil Company (INK), in Irkutsk Region, Russia March 11, 2019. REUTERS/Vasily Fedosenko

In tonnes, oil output reached 45.975 million versus 47.783 million in March, which is a day longer. Reuters uses a tonnes/barrels ratio of 7.33.

Russia has pledged to reduce its oil output by 228,000 bpd to around 11.18 million bpd from the roughly 11.41 million bpd it pumped in October 2018, the baseline for the supply agreement.

Energy Minister Alexander Novak said on Thursday that Russian production in May would be in line with the agreed level.

In a statement, he said Russia had cut its oil output by 213,000 barrels per day (bpd) in April on average from October 2018 levels, excluding production-sharing agreements (PSAs) with foreign companies.

Including PSA projects, production was down by 197,000 bpd.

Output at Rosneft, Russia’s largest oil producer, declined by 0.4 percent month-on-month in April. Output at Lukoil was down 0.7 percent, while production at Gazprom Neft jumped 3.2 percent, the data showed.

Russian oil pipeline exports in April stood at 4.494 million bpd, up from 4.432 million bpd in March. Such exports could be hit in May and thereafter by a row over contaminated oil that affected the Druzhba pipeline into Europe.

The Organization of the Petroleum Exporting Countries (OPEC) and other large oil producers led by Russia agreed to reduce their combined oil output by 1.2 million bpd starting Jan. 1 for six months to try to balance the market.

Several Russian officials including Kirill Dmitriev, head of Russian sovereign wealth fund RDIF, have signaled that Russia wants to raise its output due to improving market conditions.

Dmitriev and Novak have come under increased pressure over the past year from firms such as Rosneft, whose boss Igor Sechin, a close ally of President Vladimir Putin, has said Russia should abandon output cuts.

Gazprom Neft, Russia’s fastest-growing oil producer in terms of output, added to the pressure, saying it assumed the cuts deal was effective only until the middle of this year.

The next full-scale meeting of OPEC and non-OPEC oil producers is due to take place in Vienna in late June.

OPEC oil supply hit a four-year low in April, a Reuters survey found, due to further involuntary declines in sanctions-hit Iran and Venezuela and output restraint by top exporter Saudi Arabia.

Natural gas production in Russia was at 64.3 billion cubic meters (bcm) last month, or 2.14 bcm a day, versus 65.68 bcm in March.

Reporting by Vladimir Soldatkin; Editing by Dale Hudson and Richard Pullin

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