February 2, 2018 / 7:39 AM / 10 months ago

Russian oil output flat as Rosneft and Lukoil declines offset by PSAs

MOSCOW (Reuters) - Russian oil output stood at 10.95 million barrels per day (bpd) in January, virtually unchanged from December, as increases at foreign-led projects outweighed falls at Rosneft and Lukoil, data showed on Friday.

An oil pump, owned by oil company Rosneft, is pictured in the settlement of Akhtyrskaya in Krasnodar region, southern Russia, December 21, 2014. REUTERS/Eduard Korniyenko

This was almost in line with Russia’s pledge to cut output by 300,000 bpd — from the record 11,247 million bpd reached in October 2016 — as part of a deal with the Organization of the Petroleum Exporting Countries to reduce inventories and prop up oil prices.

The deal is due to last until the end of the year and could be revised in June when OPEC and Russia hold their next meeting in Vienna. Russia has said the deal should continue because the market has yet to reach supply-demand balance.

A Reuters survey showed that OPEC oil output rose in January from an eight-month low as higher output from Nigeria and Saudi Arabia offset a further decline in Venezuela and strong compliance with the supply reduction pact.

According to Russian Energy Ministry data, Russian oil output reached 46.306 million tonnes last month versus 46.322 million in December. Reuters uses a barrels/tonnes ratio of 7.33.

Production was supported by an increase at the Production Sharing Agreement (PSA) project by more than 10 percent to 1.54 million tonnes in January.

The data does not provide a breakdown for individual projects. The projects include Sakhalin-1 (Rosneft, ExxonMobil, ONGC and Sodeco) and Sakhalin-2 (Gazprom, Shell, Mitsui and Mitsubishi).

It was expected that oil output from Russia’s Far Eastern Sakhalin-1 project was set to rise by about a quarter from 200,000 bpd.

However, the project ditched plans to raise output this year after it was ordered by the authorities to return to previous lower production limits, industry sources said.

PSAs were concluded in 1990s and has to get an approval for its operational plans form the Russian authorities.

On Thursday Russian Natural Resources Minister Sergei Donskoi said that a request to increase output at Sakhalin-1 was still being studied by Russian authorities.

Output at Rosneft and Lukoil, Russia’s two biggest oil producers, declined by 0.2 percent and 0.5 percent respectively last month.

Natural gas production was at 65.35 billion cubic meters (bcm) last month, or 2.11 bcm a day, versus 63.5 bcm in December.

Gas giant Gazprom said on Thursday that its production last month fell by 3.2 percent year on year to 45.6 bcm.

Reporting by Vladimir Soldatkin; Editing by David Goodman

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