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Russia’s Oil Output Hits Post-Soviet High

Russia’s Oil Output Hits Post-Soviet High
Created: 03.10.2005 15:42 MSK (GMT +3), Updated: 16:03 MSK, 2 hours 31 minutes ago
MosNews

Russian oil output resumed steady growth as it rose for a fourth straight month and added 40,000 barrels per day (bpd) in September to reach 9.53 million barrels per day, a new post Soviet high, Energy Ministry data showed on Monday, Oct. 3.

Production grew 0.4 percent from August’s 9.49 million barrels per day, which was the previous post Soviet record. Output was also 1.2 percent higher than 9.42 million barrels per day produced in September 2004, when production begun to stagnate after years of explosive growth.

Output averaged 9.38 million barrels per day between January-September 2005, up a mere 2.7 percent from a year-earlier 9.13 million barrels per day. Production grew by 9 percent in 2004 and by a record 11 percent in 2003.

Analysts have blamed the collapse of oil major Yukos and high taxes for the stagnation in production growth, a factor that helped drive global prices higher. Production growth resumed in June 2005 after eight months of stagnation, prompting some analysts to say the doldrums were over and growth rates should improve from October.

The government said this month it wanted to cut taxes to encourage exploration and development of new fields, sparking more optimism about output prospects. However, no concrete promises have been made, and moreover certain officials, such as Finance Minister Alexei Kudrin, have said that they see no need to decrease taxation in the oil production sector.

Top producer Lukoil, No. 2 firm TNK-BP and state-owned Rosneft Oil Companywere largely responsible for a boost in output in September, while production of the fallen firm Yukos was flat month-on-month after a long period of decline.

Lukoil produced 1.77 million barrels per day as compared with 1.76 million in August, while TNK-BP, half owned by British Petroleum, ramped up production to a new high of 1.57 million barrels per day compared with 1.55 million in August and 1.47 million a year ago.

Rosneft, which snapped up Yukos’ main production unit Yuganskneftegaz at a forced state auction last year, pushed up production further to 1.53 million barrels per day compared with 1.51 million in August and 1.49 million in July 2005.

Production at the remaining units of Yukos, Samaraneftegaz and Tomskneft, has likely bottomed in September after months of steep decline as they produced 435,000 barrels per day compared with 437,000 barrels per day in August and some 600,000 barrels per day they were extracting last year.

Russia’s No 5 oil firm Sibneft showed the steepest decline after years of explosive growth confirming analysts’ views that its shareholders, led by the owner of Chelsea soccer club, Roman Abramovich, have stopped investing in the company ahead of its sale to state natural gas monopoly Gazprom. The firm produced 656,000 barrels per day, flat month-on-month but down a record 7 percent from 702,000 barrels per day in produced in September 2004. As MosNews reported, Sibneft, which was one of the key driving forced behind Russian output growth in previous years, was sold in September by its owners to Gazprom for a $13.1 billion.

On the export front, oil shipments via the trunk pipelines of state monopoly Transneft remained flat in September from August at 4.49 million barrels per day. Shipments fell from the Black Sea port of Novorossiisk due to stormy weather and steeply declined from Ukraine’s Black Sea port of Yuzhny due to lighter scheduled loadings, but rose from Butinge on the Baltic Sea.

The news of increased oil output come as a pleasant surprise amid the gloomy forecasts that have been made in recent months by government officials and oil companies’ heads alike. As early as last summer the experts began to forecast a slack in Russian oil production, saying that one of the main reasons for such an event would be the fact that oil companies lag behind in their exploration efforts. In Soviet Union state oil and gas monopolies had to invest in geological exploration, and there were special institutes and geological expeditions set up for this purpose. But in recent years Russian oil companies have been putting all their profits into production. In order to prevent the depletion of current deposits, the oil producers really have to slow down their pumping efforts and concentrate on exploratory drilling, the experts said.


LINK: http://www.mosnews.com/money/2005/10/03/oilspecialreport.shtml