In Oil & Companies News 29/01/2016
Russia’s oil output in January is set to surpass a post-Soviet record even as energy-company bosses and government officials consider whether or not to cooperate with OPEC to shore up crude prices amid a global supply glut.
The country’s production of crude and a light oil called condensate is on track to reach 10.89 million barrels a day in January, up 83,000 barrels a day — or the biggest monthly increase since September 2014, according to Bloomberg estimates based on Energy Ministry data.
The potential for a monthly record arises as Russia’s oil industry and state begin talking among themselves about output levels. Company officials and Russia’s Energy Minister spent last night discussing the possibility of coordinating actions with the Organization of Petroleum Exporting Countries due to unfavorable global prices, according to the ministry.
“The issue of oil-market volatility is being actively discussed,” Kremlin spokesman Dmitry Peskov told reporters Thursday on a conference call. “It is too early to predict the outcome of these talks.”
Biggest Producer
The need for discussions with Saudi Arabia about oil prices and the possibility of participating in talks with OPEC were among topics at the meeting, Transneft Chief Executive Officer Nikolay Tokarev, a participant, told reporters. OPEC pumps about 40 percent of the world’s oil, and Saudi Arabia is its biggest producer. It’s possible Russia will join in talks with the group next month, Tokarev said.
OPEC’s members abandoned their output target on Dec. 4 at a meeting in Vienna, and Saudi Arabia has led the group in fighting for market share against higher-cost producers such as shale drillers in the U.S. Benchmark Brent crude dropped for a third year in 2015 and is down 10 percent this year.
OPEC can’t cut production to balance the market unless other producers cooperate with it, Anas Al-Saleh, Kuwait’s finance minister and acting oil minister, said Tuesday in Kuwait City. Iraqi Oil Minister Adel Abdul Mahdi said on the same day that Saudi Arabia and Russia, the world’s two largest exporters, are now more flexible about cooperating to cut output, without providing details.
Yarudeyskoye Field
Russia’s production at the start of the year will be bolstered by higher output from new fields, particularly Novatek’s Yarudeyskoye field, said Alexander Nazarov, a Gazprombank analyst. That trend will reverse itself over the year as companies close old wells, he said. Nazarov predicted that Russia will pump more than 10.8 million barrels a day in January.
“Companies won’t stimulate production from those wells where its unprofitable,” he said.
Monthly output will probably fall 1.5 percent to as low as 10.6 million barrels a day by year-end, Nazarov said. He estimates that average production for 2016 will be stable or slightly lower than last year.
