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UPDATE 2-Foreign-owned projects boost Russian oil output in Sept

Thu, 02nd Oct 2014 09:31

* Russian oil output reaches 10.61 mln bpd in September

* Russian gas production up to 1.52 bcm last month

* Sanctions have not hit hydrocarbon output in Russia (Adds detail, analyst comments, references to tables)

By Vladimir Soldatkin

MOSCOW, Oct 2 (Reuters) - Foreign-led projects liftedRussian oil output last month to within reach of a post-Sovietrecord, showing the potential in the country's existing fields,which are largely unaffected by Western sanctions over Ukraine.

Output of oil and gas condensate in the world's largestproducer rose 0.9 percent to 10.61 million barrels per day (bpd)last month from August, a touch under the post-Sovietrecord-high of 10.63 million bpd reached in December, EnergyMinistry data showed on Thursday.

Oil production rose in January-September by 0.7 percentyear-on-year, showing that Moscow has not curbed its output toprop up the oil price, which reached a 27-month low under $93per barrel on Thursday, due to weak demand in China in Europe.

A price below $100 marks the pain threshold for Russia'sfaltering economy. Russia's central bank said on Wednesday it isworking on measures to support the sanctions-hit economy shouldoil prices fall by as much as a third or more.

The United States and European Union have imposedwide-ranging sanctions on Moscow for its role in the Ukrainecrisis, including freezing access to foreign technology andbanning Western firms from cooperating in Arctic, shale anddeep-water drilling. This targets mostly future oil output.

However, Russia provides around a third of the EuropeanUnion's oil and gas, and many governments in the bloc are waryof antagonising Russia further.

"It is unlikely that we'll see any impact on Russian oilproduction from the sanctions by the year-end," AlexanderKornilov from Alfa bank said, although that could change if newsanctions are applied next year.

The EU decided on Tuesday to keep in place a package ofsanctions against Russia despite what it called "encouragingdevelopments" on the ground after a ceasefire deal.

OPEC secretary general Abdullah al-Badri said last month heexpected the group to lower its oil output target when it meetsin late November, which would be its first formal output cutsince the 2008 financial crisis.

Russian Energy Minister Alexander Novak met al-Badri lastmonth, although the two did not discuss the oil price.

In tonnes, Russian oil output was 43.411 million inSeptember versus 44.472 million in August, which has one moreday than September.

PSA PRODUCTION

Oil output under production sharing agreements (PSA),designed in the 1990s to encourage investment by foreign oilcompanies, jumped by 24 percent in September to almost 1.23million tonnes (298,844 bpd).

The ministry does not provide a breakdown of the data forthe projects, which include Sakhalin-1 of Rosneft, ExxonMobil, ONGC and Sodeco; Sakhalin-2 involving Gazprom, Shell, Mitsui, and Mitsubishi ; andKharyaga with Total, Statoil andZarubezhneft. Sanctions do not affect these projects.

Small firms, which the ministry defines as "otherproducers", increased their oil production by 1.5 percent, whileoutput at Rosneft, the world's top publicly traded oilcompany, was flat at 3.8 million bpd.

Russian daily gas output rose to 1.52 billion cubic metres(bcm) per day last month from 1.38 bcm in August.

Natural gas production at Gazprom, the world's largest gasproducer, jumped 14 percent from August to 968 million cubicmetres a day on an increase in seasonal demand.

Gazprom's production for January-September fell by 9 percentto 311.6 bcm. Analysts expect that its output will hit anall-time low of around 450 bcm this year after it halted gassupplies to Ukraine in June over a pricing dispute and debts. (Reporting by Lidia Kelly and Vladimir Soldatkin; Additionalreporting by Olesya Astakhova; editing by Elizabeth Piper andSusan Thomas)

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