Russian oil output back to OPEC deal levels

ST PETERSBURG/MOSCOW: Russia has restored its oil output to levels agreed under a deal between OPEC and non-OPEC oil exporters and production in the last half of July will rise from the first half, Energy Minister Alexander Novak said on Thursday.

Russia's production plunged to almost a three-year low in early July due high organic chloride content found in oil in April, which disrupted pipeline exports.

"Our production has been restored in line with plans and schedules. There were several days when output was reduced with over-compliance. It was related to a technological process," Novak told reporters.

Russia's largest producer, Rosneft, said last week that pipeline monopoly Transneft curbed oil intake from Yuganskneftegaz, Rosneft's main upstream unit, hurting production that had already been hit by the contamination crisis.

Novak said on Thursday that there were no any caps on oil supplies from Yuganskneftegaz.

Russia has agreed to reduce its oil production by 228,000 barrels per day (bpd) from the 11.41 million bpd it pumped in October 2018, the baseline for the current global deal.

Under that formula, its output should be around 11.17 million-11.18 million bpd. Industry sources said oil output fell to 10.79 million barrels per day (bpd) in early July.

DIRTY OIL CRISIS

Separately, an energy ministry official said Russia has started diluting contaminated oil with clean crude at the Baltic Sea port of Ust-Luga where the organic chloride content is not expected to exceed 4 parts per million (ppm).

Industry sources have told Reuters that major Russian oil companies have challenged a plan by Transneft that aims to resolve the problem of tainted oil stuck in Russia's pipeline and storage system by diluting it with clean crude.

As a result, organic chloride levels would average 5 ppm in all Russian Urals oil exports from the Black Sea and Baltic ports as well as for supplies to domestic refineries in Russia's western European region.

This is within Russian technical standards, but still higher than many European refineries are willing to process.

Anton Rubtsov, in charge of oil and gas refining department at the ministry, also said he expected the oil refining volumes in Russia to decline this year due to the suspension of the Antipinsky plant, TASS news agency reported.