- Daily production set to reach 10.77 million barrels in Oct.
- Nation's producers have shrugged off crude price slump
Russian oil output is poised to break a post-Soviet record for the fourth time this year as the nation’s producers once again prove themselves resilient to a slump in crude prices.
Production of crude and a light oil called condensate is on track to reach 10.77 million barrels a day in October, topping the previous month’s revised figure and setting a record for the second month running, according to Bloomberg estimates based on Energy Ministry data.
Russian production has withstood a collapse in oil prices amid a global supply glut, while output in the U.S. has fallen about 5 percent from its June peak. Oil-extraction and export tax rates shrink in Russia at lower prices, giving companies a buffer against the slump, while the weaker ruble has reduced costs.
“Russian oil companies are insulated from oil price corrections,” said Artem Konchin, an oil and gas analyst at Otkritie Capital in Moscow. “Through the tax framework, the government took the brunt of the blow, just as it used to take most of the windfall profits. The rest of the story is in the ruble depreciation.”
The production figure for October is derived from output data from the Energy Ministry’s CDU-TEK unit for the first 28 days of the month. The remaining days were estimated using an average of the previous seven days.
Output from January to October averaged about 10.7 million barrels a day, a 1.3 percent increase over the same period in 2014, the data show. That’s in line with the Russian Energy Ministry’s full-year forecast for production of 533 million tons, or 10.7 million barrels a day.
The nation’s government has proposed increasing the tax burden on energy companies after the collapse in the price of crude, which together with natural gas provides almost half of state revenue. Oil output will suffer without a predictable tax system, Rosneft OJSC Chief Executive Officer Igor Sechin said Oct. 13.