Russian Crude Output Plummets to Year-Low

Russian oil output slipped to a year-low of 10.91 million barrels per day in August from 10.95 million bpd in July, Energy Ministry data showed on Saturday, as Gazprom Neft suspended offshore Arctic production to carry out maintenance.

In tons, oil output reached 46.14 million barrels versus 46.30 million in July, Reuters reported.

It was the lowest level of output since 10.71 million bpd in August 2016 and it is down 3% from the October level, the benchmark when a global oil deal was reached on curbing oil production.

The Organization of Petroleum Exporting Countries and other leading oil producers, including Russia, agreed at the end of last year to cut their combined oil production by almost 1.8 million barrels per day in search of a supply and demand balance amid weaker oil prices.

Russia has agreed to reduce its output by 300,000 bpd from the October level of 11.247 million bpd. For the January-August period, oil output edged up 1.4% year-on-year.

Oil pipeline exports from Russia in August rose to 4.34 million bpd from 4.1 million bpd in July.

According to the Energy Ministry data, Gazprom Neft, the oil arm of Russian gas giant Gazprom, reduced its output last month by almost 5% as it suspended production at the offshore Arctic Prirazlomnoye Oilfield for maintenance.

The local press has said the maintenance work at Russia’s only producing offshore Arctic oilfield is due to be wrapped up in October. Gazprom Neft plans to produce over 50,000 bpd of oil at the field this year.  Western sanctions introduced in 2014 prevent western companies from helping Gazprom Neft in developing its Arctic offshore fields. Gazprom Neft launched production at the Prirazlomnoye field in Russia’s Pechora Sea in 2013.

Gazprom Neft has said that maintenance was not linked to sanctions.  Oil production also declined by 2.7% month-on-month at Bashneft, which was acquired by Russia’s largest oil producer Rosneft last year. Output at Bashneft is still reflected separately in the statistics.

Projects, led by foreign majors under production sharing agreements, reduced their output by almost 15% last month to 324,000 bpd. Natural gas production was at 54.2 billion cubic meters last month, or 1.75 bcm a day, versus 50.8 bcm in July.