Russia achieves record oil output in 2017 despite cuts

Bloomberg

Russia’s oil industry continued its long-term expansion last year, with production hitting a record even as President Vladimir Putin joined forces with OPEC to clear a global glut and lift prices.
The nation’s oil output increased to an average 10.98 million barrels a day in 2017, up 0.1 percent from the previous year, according to data published on Tuesday by the Energy Ministry’s CDU-TEK statistics unit. That’s the ninth consecutive annual increase to the highest level since the collapse of the Soviet Union in 1991.
Russian output has soared under Putin’s leadership, nearly doubling from 6.1 million barrels a day in 1999. The industry’s long expan-sion could pause in 2018 because Russia has agreed to another year of cuts with the Organization of
Petroleum Exporting Countries.
The unprecedented period of cooperation depleted bloated fuel stockpiles and boosted prices last year, re-shaping the global oil market
and energy geopolitics.
Despite the cuts, Russia achieved a record because it ramped up production so rapidly the year before. Output reached 11.23 million barrels a day in October 2016, a month before the accord with OPEC was announced. Russia implemented its pledged 300,000 barrel-a-day supply cut gradually.
Russia’s allies in OPEC aren’t complaining. Brent prices climbed 18 percent last year and global inventories have fallen. Brent rose 0.2 percent to $67 a barrel on the London-based ICE Futures Europe exchange at 8:40 a.m. local time.
Following the November decision to extend the pact through 2018, Saudi Arabia’s Energy Minister Khalid Al-Falih, sitting next to his Russian counterpart Alexander Novak at a press conference, said “we are completely aligned.”
Oil output in December was 10.95 million barrels a day, up 0.1 percent from November, while exports dropped 5.3 percent to 5.24 million barrels a day, according to CDU-TEK.

NATURAL GAS
Russia’s natural gas production rose to its highest ever last year, driven by increasing sales to Europe and rising domestic demand.
Government data published on Tuesday showed that output jumped 7.9 percent to beat a 2011 record. With a pipeline of projects including plans to expand into China and new liquefied natural gas plants, the country may close the gap on the US, which leapfrogged Russia to the top spot in global production of the fuel nine years ago.
Russia needs to strengthen its position in the global gas market as it’s considered a leading global energy power, President Vladimir Putin said last month. Already the world’s largest exporter of the fuel, the nation is working to boost output
with new LNG plants stretching from the Baltic region to the Pacific coast. That will pit the country against
the biggest producers of the super-chilled fuel, including Australia.
Russia is also working to keep shipments to Europe near record levels this year as state-run Gazprom PJSC, the continent’s biggest supplier, plans to start pipeline exports to China in late 2019. Gazprom meets more than a third of Europe’s demand for natural gas and the nation’s most lucrative market was worth some $37 billion in revenue last year.
Gazprom’s increased sales helped boost overall production to 690.5 billion cubic meters (24.4 trillion cubic feet) last year, exceeding the 2011 record by 2.9 percent.
As a result of the shale gas revolution, the US became the world’s largest natural gas producer in 2009, and has kept the crown for most of the time according to official data from the two nations.
US producers pumped 22.1 trillion cubic feet (about 626 billion cubic meters) of dry gas in the first 10 months of 2017, according to December data from the US Energy
Information Administration. This was 11 percent higher than Russia for the same period.
Russia has resources to increase its LNG production by almost 10 times to about 100 million tons by 2035, led by the privately-owned Novatek PJSC in the Arctic, according to the nation’s Energy Ministry.
The US imposed financial sanctions against Novatek in 2014 after Russia annexed Crimea and last year added export pipelines to the list of sanctions against Russia, setting risks for Gazprom’s projects. Putin ordered the government in December to identify economic and political “threats” to the nation’s gas projects as well as steps to take to overcome or minimise them.
Officials in Moscow are also planning to improve gas-output forecasts in the nation’s long-term energy strategy, adding planned and potential LNG projects.