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Russia oil output hits new record, gas declines

Gas production falls to 1.42 bcm.

August 2, 2010 3:46 by



Russian oil output reached a record-high level in July and stayed above 10 million barrels per day (bpd) for the eleventh consecutive month but gas production continued its decline amid weak demand for the fuel.

The Energy Ministry said on Monday July oil output rose by 0.1 percent to a record high of 10.14 million month-on-month, allowing Moscow to retain the world’s top position ahead of Saudi Arabia, which edged its production up to 8.30 million bpd last month.

“The main driver of the growth was Rosneft’s unit Yuganskneftegaz, while its new Vankor division — which has shown a steady rise in the past — has peaked out,” Denis Borisov, analyst with Bank of Moscow, told Reuters.

He added that overall production at state-controlled Rosneft, responsible for one-fifth of oil output in Russia, grew by 0.8 percent from June.

Analysts have warned that the oil production in Russia would starting to decrease due to depletion of Western Siberian oil fields and high taxation.

“In August-September, we will see a slower growth year-on year as the Vankor field was launched in July last year,” Pavel Sorokin, an analyst at Alfa bank told Reuters.

The state might soon sell a part of its holdings in Rosneft as Russia mulls $29 billion of asset sales, its most ambitious privatisation programme since the 1990s.

July oil production in Russia increased despite the reintroduction of export duties for far-flung East Siberian oil fields, although smaller than for the rest of the country.

The Finance Ministry also proposed hiking mineral extraction tax for gas firms by 61 percent from Jan.1.

Oil exports via Russian pipeline monopoly Transneft rose to 4.53 million bpd from 4.22 million bpd in June.

GAS OUTPUT DECLINES

Russia’s natural gas production continued its decline amid falling demand in Europe and at home.

Russia’s overall gas output fell to 1.42 billion cubic metres per day in July from 1.49 bcm per day in June, while daily production at energy giant Gazprom was cut to 1.08 bcm from 1.12 bcm.

Borisov from Bank of Moscow said that gas production might have declined due to weak demand in southern Europe, where Greece is reeling from financial woes.

“And the production decline came as electricity consumption rises,” he said adding that Gazprom’s July output was higher by 6 percent from the year-ago level, but was lower by 10 percent than in pre-crisis 2007.

(Editing by Dmitry Sergeyev and Keiron Henderson)



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