September 21, 2016 / 4:35 PM / 3 years ago

Putin opens production at new Russian oilfield as output touches record high

NOVO-OGARYOVO, Russia (Reuters) - President Vladimir Putin officially launched production at a new oil field on Wednesday, a day after Russia’s output touched a record high even as Moscow prepared to join talks aimed at supporting prices.

Russian President Vladimir Putin delivers a speech during a meeting with members of the Russian summer sports Paralympic team at the Kremlin in Moscow, Russia September 19, 2016. REUTERS/Ivan Sekretarev/Pool

OPEC and non-member producers including Russia will meet next week to discuss a potential deal to stabilize the market by at least freezing output in efforts to contain a supply glut that triggered a price collapse two years ago.

But OPEC producers Saudi Arabia, Iraq and Iran have pushed output to record highs this year in a bid to gain market share despite low prices.

In Russia, oil output touched an all-time high of 11.75 million barrels per day (bpd) on Tuesday, Russian deputy energy minister Kirill Molodtsov was quoted as saying by the Interfax news agency on Wednesday. Analysts suggested it was likely a one-off jump and may not be sustained.

Still, Russia, the world’s top oil producer, plans to launch a further two new fields this year, apart from the Vostochno-Messoyakhskoye oilfield on Russia’s Yamal Peninsula which Putin launched on Wednesday.

Messoyakha should add 600,000 tonnes of oil (about 12,000 barrels per day) to Russia’s production this year, Gazprom Neft First Deputy Chief Executive Vadim Yakovlev told the Reuters Russia Investment Summit last week.

Gazprom Neft and Rosneft are jointly developing the field. Rosneft boss Igor Sechin said first oil will flow into the Transneft system on Wednesday.

Rosneft’s Sechin told Putin via a video link on Wednesday that the company hoped to launch a second field, Suzun, in a month’s time. It should produce 1.2 million tonnes (24,000 bpd) this year.

Another new field, Lukoil’s Filanovsky in the Russian part of the Caspian Sea, is expected to be launched later this year.

Russia and members of the Organization of the Petroleum Exporting Countries will hold an informal meeting in Algiers on Sept. 28. Efforts by producers to agree to freeze output levels collapsed in April over disagreements between OPEC members Saudi Arabia and Iran.

Russia’s oil production is expected to reach 547 million tonnes this year (10.95 million bpd), two industry sources told Reuters earlier this month, up from the previous record-high of 534 million tonnes, or 10.72 million bpd, in 2015.

An energy ministry official told Reuters on Wednesday that Russia’s average oil production was holding at around 11.09 million bpd through Sept. 20.

“The production is growing due to past investments, also backed up by a favourable taxation regime... Yet, production this time of the year is traditionally at a peak - let’s see what’s next,” Denis Borisov, director at EY’s oil and gas center in Moscow, said.

Reporting by Denis Pinchuk, Olesya Astakhova and Oksana Kobzeva; writing by Katya Golubkova; editing by Maria Kiselyova and Susan Thomas

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