Russian oil output will stagnate in 2010 and begin to decline as mature fields lose production capacity and only one new project comes on line, oil analysts at Bernstein Research said on Wednesday.

Russia, now the world’s largest oil producer, pumped 10.01 million
barrels per day last month, up 0.4 percent from the 9.97 million bpd
produced in August, both record highs, Russian Energy Ministry data
released last week showed.

But Bernstein analysts said Russian production, which recovered in 2009
after dropping for the first time in a decade in 2008, was merely
experiencing a temporary spike following the launches of eight new
fields this year.

Senior oil analyst Clint Oswald at Bernstein Research wrote that 0.6
percent year on year growth in the year to the end of September, in a
year when eight projects added 640,000 bpd of new production, “does not
sound like a great achievement or the start of an up trend.,”

“With only one significant field due to come on stream in 2010 and
reduced drilling activity, we continue to expect declining oil output
in Russia in the near term,” Oswald wrote in a research note.

He projected three possible scenarios for 2010, assuming decline rates
in base production of 3 to 4 percent, resulting in a percentage output
drop ranging from 0.29 percent to 1.24 percent down year on year.

LUKOIL, Russia’s second-largest oil producer said in September it
expected to start production from one of its Caspian oilfields at
Korchagin in March 2010, and to be able to pump 240,000 bpd from two of
them by 2016.

OUTPUT MAY CONTINUE CREEPING HIGHER -BP

Russia has emerged as the world’s oil production leader this year after
the Organization of the Petroleum Exporting Countries agreed to cut
supply by 4.2 million bpd since September 2008 in a bid to prop up
falling oil prices.

OPEC has kept its official output targets unchanged at meetings since,
most recently on Sept. 9. Oil prices CLc1 have risen by more than 50
percent this year to around $75 a barrel.

But industry officials said Russia’s September production record was perhaps the end of a strong run.

“We could see Russian production continue creeping up above 10 million
bpd, but it will rise at nothing like the rate we saw earlier this
century,” BP’s Chief Economist Christof Ruhl told Reuters on Tuesday.

Before this August, Russia’s previous monthly record for oil production was 9.93 million bpd reached in October 2007.

Russian production this year was boosted by the launch of Rosneft’s
massive Vankor in the Arctic and several other new fields, including
LUKOIL’s South Khylchuyu and Verkhnechonskoye fields owned by BP-led
TNK-BP.

Source: Reuters

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