Russian Oil Production, Exports Fall

The Export Land Model got another piece of strong evidence recently from a report by Bloomberg that Russian oil production dropped .4% in September (boy, that’s quick - seems likely to be revised) but exports dropped 10%!  If true, it almost sounds as though Russia is building some above ground strategic storage capacity.   On the other hand, it also must reflect the arithmetic truth that an oil exporting country with a growing economy will export less oil each month than its production would otherwise suggest, since they are using more internally.  Duh!

Russian Oil Output Falls for Ninth Straight Month (Update1)

By Greg Walters

Oct. 2 (Bloomberg) — Russia’s oil production fell for the ninth straight month in September as producers struggled with rising costs and maturing fields, bringing the world’s second- biggest crude exporter closer to its first annual drop in output since 1998.

Production fell 0.4 percent to 9.83 million barrels of crude a day (40.2 million metric tons a month) compared with a year earlier, according to figures released by the Energy Ministry’s CDU-TEK unit.

Output in Russia’s oil heartland of western Siberia is flagging as older fields mature and companies invest in harder- to-reach regions to tap deposits. In July, parliament approved tax breaks championed by Prime Minister Vladimir Putin to spur investment in national production.

“Right now the tax regime favors only highly-productive wells,” said Chirvani Abdoullaev, an oil and gas analyst at Alfa Bank in Moscow. “Will the tax changes really incentivize companies to drill less-prolific wells? I’m not sure.”

Total exports fell 10 percent year-on-year to 5.14 million barrels a day. Exports via OAO Transneft, the country’s crude oil pipeline operator, slid 9.1 percent to 4.13 million barrels a day from last year.

Russia’s sliding crude export duty, which rises when oil prices are higher, leaves less money to develop harder-to-reach deposits. Putin said in May taxes took as much as 80 percent of profits.

The world’s largest crude supplier is Saudi Arabia.

The report can be found here.

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