Russian oil production increased 0.1% month-on-month to 11.17mmbbl/d in November, CDU TEK said on December 3.
Opec may have agreed a production cut deal with oil producers, including a 300,000 barrel cut in Russian production, but Russia’s oil production continues to run at record highs and the leading companies are not keen to cut.
The growth in Tatneft’s output eased to a moderate 1.1% m/m after the strong 3% m/m in October. Bashneft continued its steady m/m growth, adding 1.2%. Gazprom Neft’s oil output growth turned slightly negative in November (-0.6%) after months of strong results. Lukoil showed m/m growth of 0.2%, but in y/y terms is still negative (-0.9%). Rosneft’s oil production growth was negative in November (-0.9%).
Meanwhile, Surgutneftegas showed the best result among Russian oil majors, of 1.3% m/m. Other producers added 0.6% m/m of oil production volumes.
Gas production in Russia is also increasing. In November is exported a record amount to non-CIS countries. Russia’s gas production increased 3.6% m/m and 2.9% y/y. Gazprom’s gas production increased with the start of the heating season, up 6.8% m/m and 2.6% y/y. At the same time, Novatek’s gas production decreased 11.8% y/y. Lukoil’s gas production was down 2.9% y/y, Rosneft was up 9.1% y/y, Surgutneftegas was up 2.2% y/y.
Still, In the wake of the OPEC agreement to cut oil production, with Russia joining in, the prospects for oil production growth in Russia are unclear at this point, say analysts with VTB Captial.
“Despite reassurances from the Minister of Energy, Alexander Novak, about a production cut being implemented in Russia, companies have still not officially confirmed production cuts,” VTBC said in a note.
The companies themselves are not keen to cut production. The government has said that the cuts should be distributed evenly over the sector, but some companies have already asked for compensation if cuts are imposed on them.
Earlier this month, Tatneft disclosed upbeat guidance about increasing oil output 2.8% in 2017. Bashneft and Gazprom Neft are still going to be supported in the medium term by production growth at greenfields, first of all Trebs & Titov, as well as Prirazlomnoye, Novoportovskoye and East-Messoyakhskoye, VTBC said.
“Lukoil, in turn, has launched two major greenfields this year (Filanovskogo and Pyakyakhinskoye), which we expect to provide strong support to the company’s generally declining production trend in the coming years. Surgutneftegas has not revealed any major plans for production changes in the near term, with oil output staying at 61-62mmt per annum, according to the company’s latest guidance,” VTBC said.
Rosneft’s production might be slightly up this year thanks to intensified drilling at brownfields and the boost in production at the Suzun field.