Russian Oil Output Flat in February, First Sign of Freeze Deal
Russia in February pumped oil at the same rate in January of 10.88 million barrels per day (bpd), an almost 30-year high, after some leading producer countries struck a preliminary deal to freeze output, Energy Ministry data showed on Wednesday.
The readout is the first tentative sign that Russia appears to be sticking to a pledge it gave in Doha last month to hold output at January levels, an effort to support sagging oil prices, which fell by around 70 percent since June 2014.
The deal disappointed those hoping for a production cut as the level at which output was frozen was high for post-Soviet Russia. Compared to February 2015, Russian output last month was in fact 2 percent higher.
In tonnes, oil output hit 43.064 million versus 46.006 million in January, which was two days longer.
The same data showed that crude output at the world’s top listed oil producer Rosneft was unchanged last month, while output at Lukoil, Russia’s No.2 oil producer, edged down by 0.5 percent month-on-month.
Russia, Saudi Arabia, Qatar and Venezuela said after talks in Doha that they were ready to freeze production at January levels if other producers did the same.
On Tuesday, Russian Energy Minister Alexander Novak said Russian oil producers had backed the idea of freezing output for this year.
OPEC sources and delegates have told Reuters that OPEC is very unlikely to cut output at its next meeting in June because it will be too early to say how fast Iranian output is rising.
The sources said OPEC countries such as Saudi Arabia also want to test Russia’s commitment to freezing output before taking any further steps to stabilize prices.
“The prospect of a detente between two of the largest oil producers in the world (Saudi Arabia and Russia), already at loggerheads over the Syria conflict, was almost too good to be true,” Singapore Exchange (SGX) said in a monthly note on Tuesday.
“Alas, this turned out to be the case with the meeting yielding no more than a production freeze subject to compliance from Iran and Iraq. A production freeze is nothing near to a production cut,” it added.
Russian natural gas production was at 52.92 billion cubic meters (bcm) last month, or 1.82 bcm a day, versus 61.94 bcm in January.
