Russia's Oil Output Hits 11-Month Low on Dirty Oil Crisis

MOSCOW (Reuters) - Russian oil output fell to 11.11 MMbpd in May, its lowest level since June 2018, from 11.23 MMbpd in April, Energy Ministry data showed on Sunday.

The production fall resulted mainly from the closure due to oil contamination of Russia's Druzhba pipeline, which usually ships 1 MMbpd, or 1 percent of global oil demand.

As a result, Russian oil production during May fell by more than stipulated in a global deal with the Organization of the Petroleum Exporting Countries (OPEC).

The Energy Ministry data showed Russian oil pipeline exports in May fell to 4.209 million bpd, from 4.494 million bpd in April, as supplies via the Druzhba pipeline almost dried up, while seaborne exports jumped by 11.5%.

Russia expects to clean up the pipeline, which was built in the 1960s and carries Russian oil to Europe, including Germany, Hungary, Poland and Slovakia, within six to eight months.

June 2018 production was 11.06 MMbpd.

In tons, oil output reached 47.004 million in May versus 45.975 million in April, which is one day shorter than May. Reuters uses a tonnes/barrel ratio of 7.33.

Russia's largest oil producer Rosneft accounted for most of the cuts, with a month-on-month reduction of 2.9% in May, while domestic output at Russia's No.2 oil producer Lukoil edged up 0.7% last and Gazprom Neft boosted its output by 4.7%.

Both Lukoil and Gazprom Neft have their own exporting terminals in the Arctic.

Below Quotas

OPEC and other large oil-producing countries led by Russia agreed to curb output by a combined 1.2 MMbpd for six months from Jan. 1, in order to balance the global oil market.

Of this, Russia pledged to cut its production by 228,000 bpd from the deal baseline of the October 2018 level, to 11.18 MMbpd.

OPEC and Russia are excepted to gather in Vienna later this month or in early July to discuss what to do in the second half of the year.

Top oil exporter Saudi Arabia has raised production in May, a Reuters survey found, but not by enough to compensate for lower Iranian exports that collapsed after the United States tightened the screw on Tehran.

The 14-member OPEC pumped 30.17 MMbpd in May, down 60,000 bpd from April and the lowest OPEC total since 2015, the Reuters survey showed.

Oil prices slumped by more than 3% and posted their biggest monthly drop in six months on Friday after U.S. President Donald Trump stoked tensions by threatening tariffs on Mexico, a key U.S. trade partner and major crude oil supplier.

Russian natural gas production was at 63.28 Bcm in May, 2.04 bcm a day, versus 64.3 bcm in April. (Reporting by Vladimir Soldatkin; Editing by Clarence Fernandez and Alexander Smith)

Related News


{{ error }}
{{ comment.comment.Name }} • {{ comment.timeAgo }}
{{ comment.comment.Text }}