MOSCOW: More crude from state-owned top producer Rosneft kept Russian oil output the highest in the world last year, ahead of Saudi Arabia, Energy Ministry data showed yesterday.
Crude output edged up almost 1 percent to a new post-Soviet high of 10.37 million barrels per day (b/d), but the increase could halt this year due to depleted oil fields in West Siberia.
Russia, whose proceeds from oil gas constitute around half of budget revenues, aims to keep its crude production at no less than 10m b/d until 2020. The Kremlin has increased its share in the oil industry to over 50 percent after top oil producer Rosneft clinched an agreement to acquire Anglo-Russian TNK-BP for around $55bn in a cash-and-stock deal.
After the acquisition, expected to be completed in the first half of this year, Rosneft will become the world’s largest listed oil producer with hydrocarbon output of some 4.6 million barrels of oil equivalent per day.
In tonnes, Russia’s crude production was 518.018 million last year, the ministry said, up from 511.432 million tonnes in 2011, which was one day shorter than 2012. In December, Russia’s oil production edged down to 10.48 million bpd from 10.50 million in November, a post-Soviet high.
Rosneft reported one of the largest rises in crude output among the Russian oil majors last year, with an increase of 2.3 percent to 117.473 million tonnes (2.4m b/d) on a daily basis thanks to increased production at its East Siberia’s Vankor field to 367,000 b/d.
Lukoil, Russia’s second-largest oil producer, saw a 1 percent decline in domestic output, to 84.620 million tonnes. Lukoil has tried to increase its exposure to overseas oil deposits as it has been unable to offset a production decline at its mature West Siberian oilfields. It owns 75 percent of Iraq’s huge West Qurna-2 deposit.
Saudi Arabia has restrained its output to steady oil prices, which reached a record high last year. Brent crude averaged over $111 a barrel in 2012, the highest on record. The international benchmark gained 3.5 percent for the year, after rising 13.3 percent in 2011. The windfall has helped oil production in Russia, where the extent of the crude output rise surprised many analysts. Moscow hopes the momentum will continue with so-called tight oil, hidden in layers of rock.
However Russia has yet to follow the United States in deploying advanced horizontal drilling and hydraulic fracturing technologies, which is known as fracking, on a commercial scale. Last month, Rosneft has agreed with ExxonMobil to tap the shale oil in West Siberia.
The International Energy Agency (IEA) expects non-Opec supplies to grow by 900,000 b/d to 54.17m b/d in 2013, taking total consumption up to an average of 90.52m b/d, while production in Russia will decline.
“We expect Russia’s crude production to be lower by around 100,000 barrels per day in 2013 mainly because brownfield production declines should outpace greenfield supply growth,” IEA’s supply analyst Michael Cohen said.
Brownfield, or established, oil production in Russia accounts for over 80 percent of total output. Vienna-based JBC energy consultancy expects Russian oil production to remain flat this year.
“We see Russian total oil output virtually unchanged this year as more widespread EOR (enhanced oil recovery) application and an increase in output in recently developed fields compensate for the declines in the mature fields,” it said.
The far-flung deposits of East Siberia are viewed as vital in offsetting declining production in West Siberia. Last month, Russia completed an expansion of its Asian oil pipeline to the Pacific port of Kozmino, filled by crude from East Siberia.
Russia has been steadily increasing its crude exports to Asia at the expense of deliveries to Europe. It shipped 16.3 million tonnes to Kozmino this year, 1.1 million up compared to 2011. Next year, exports via Kozmino will rise further, to around 21-22 million tonnes. Reuters
