Russia oil production hits new record after duty cut

Russia’s oil production has hit a new post-Soviet high of 10.34mbpd in October, buoyed by cuts in export duty, said the Energy Ministry. The new figures put the country significantly ahead of Saudi Arabia, which saw its output decline MoM from 9.5mbpd to 9.4mbpd, according to Reuters.

October was the first month of the new “60-66” taxation regime for the Russian oil industry, which reduces duties on crude oil and some refined products to stimulate production of high-grade oil products and crude.

On a company level, the country’s third-largest oil company TNK-BP, half-owned by BP, made up for the largest share of the crude production rise, with output advancing 0.2% MoM to 6.27Mt.

However, Gazprom’s output saw its natural gas production fall by 9.2% YoY as high gas prices of close to US$500/1000m3 affected sales volumes. “It is the lowest October production in the history of Gazprom,” Mikhail Korchemkin of East European Gas Analysis said.

Gazprom is facing stiff competition from independent producers including Novatek, which saw its production surge 54% YoY to 4.8bnm3. In addition, the spot market with gas at cheaper prices and alternative fuels such as LNG are providing extra competition pressures to the Russian gas company.