Russian oil output reaches post-Soviet record in September

STEPHEN BIERMAN

MOSCOW (Bloomberg) -- Russian oil output rose to a post-Soviet record last month as producers took advantage of the weak ruble to push ahead with drilling.

The nation’s production of crude and condensate climbed to 10.74 MMbpd, 1% more than a year earlier and topping a record set in June, according to data from the Energy Ministry’s CDU-TEK unit. Soviet-era production peaked at 11.48 MMbpd in 1987, according to BP Plc.

The increase comes at a time when the Organization of Petroleum Exporting Countries are defending market share rather than cutting production amid a global output glut. Russia, which gets about half of its budget income from oil and gas revenues, is maintaining its own supplies in the face of Brent crude prices that fell 50% in the past year.

Higher gas condensate production, with Gazprom Neft and Novatek OJSC ramping up the vast Arcticgas project, is a “major reason” for growth, Alexander Nazarov, an oil analyst at OAO Gazprombank, said by email. Second-tier Russian companies Bashneft PJSC and Tatneft PJSC are “booming,” he said.

Increased Drilling

OAO Rosneft, Russia’s largest producer, said in August it increased drilling for oil and gas by 27% in the first seven months of the year. The company’s oil output increased 0.4% in September from the previous month, while declining 0.6% from a year earlier.

Oil producers, which earn in dollars, pay for services using the ruble, which has weakened to about 66 a dollar from 39.56 a year earlier.

Crude exports rose 3.4% from the previous year to 5.27 MMbpd, according the data. They gained 5% from the previous month.