Russia's oil output stays at post-Soviet high

Oil output in Russia, the world's top crude producer, stayed at a post-Soviet monthly high of 10.36 million barrels per day (bpd) in February as companies tried to reap extra gains from high oil prices, the Energy Ministry said on Friday. The same level was reached in January, while Russia's previous oil production record of 10.34 million bpd was hit in November and October.
Russian oil production remained ahead of Saudi Arabia output, which rose to 9.85 million bpd from 9.75 million bpd according to a Reuters survey published on Wednesday. Oil prices are near 10 months highs on expectations of reduced supply from Iran due to sanctions and talk of military action against the Islamic Republic over its nuclear programme. Russia's Urals crude blend traded at above $124 per barrel on Friday.
"Companies were in a rush to cash in on high oil prices. But we don't rule out a fall in oil production during the course of the year when political tension will subside and crude prices will decline," Sergey Vakhrameyev from IFC Metropol said. Russia's Energy Ministry expects crude production to edge up around 1 percent this year from 10.27 million bpd in 2011 - slightly above the rate of the rise in global demand projected by the International Energy Agency (IEA).
One drag on the rise in crude output has been LUKOIL, the only major Russian producer to register a fall in oil production - 2.7 percent decline year-on-year in February - due to a miscalculation of reserves at its new Arctic field. LUKOIL said on Thursday it wrote down $1 billion in value on the South Khylchuyu field, once seen as a key source of the company's output growth and a counterweight to declines in its old West Siberian production base.
Other major producers continued to make modest gains due to modest output increases at existing fields. Gazprom Neft, the oil arm of Gazprom and Russia's fifth-largest crude producer, which received new fields from its parent company, allowing it to book a sharp 4.6 percent growth in February, year-on-year. Daily natural gas production edged up to 2.07 billion cubic metres (bcm) last month from 2.04 bcm in January.
Output from Gazprom, the world's top natural gas producer, increased by 2.6 percent to 1.6 bcm month-on-month in February, when it could not cope with rising fuel demand in cold-stricken Europe and was unable to meet requests from the EU companies for more gas. Gazprom's production edged up 0.8 percent, year-on-year, last month.
Some analysts said that the company was unable to reduce domestic supply in favour of exports before the forthcoming March 4 presidential elections, widely expected to be won by Prime Minister Vladimir Putin, who is poised to return to the Kremlin after a four-year absence.