Article / 09 February 2017 at 10:01 GMT

Oil bulls rejoice! Russia 'hits' targets

Russia oil and gas expert
United Kingdom
  • Russian oil production falls by 100,000 b/d in January
  • Cut absolutely in line with agreement struck with Opec in November
  • Russia on course to fulfill agreed targets possibly ahead of schedule
  • Oil industry body has stopped giving out output data on website
  • First time in years that CDU TEK has not released the data
k Russia sails serenely towards its agreed oil output cuts. Photo: iStock

By Nadia Kazakova

For what it is worth, the official data shows that Russian crude oil and liquids output was 11.11 million barrels/day in January or just about 100,000 b/d less than in December 2016. The output cut seems to have been wonderfully and effortlessly implemented in the first week of January, when output was cut to the desired level.

Russian crude oil and liquids output and exports, million barrels of oil equivalent/day
Source:, author's estimates for export share of output

Total crude oil and liquids exports, however, were up by 172,000 boe/d in January to 5.19 mn boe/d. It is also 4.8% up on the last year. The level of Russian exports might have created a shadow of a tension with Qatar, but there seems to be little desire within Opec to rock the boat and press Russia either on the minute detail of the output cuts or on its stubbornly high exports.

Russia is not only on her best behaviour with the output cuts in January, the Russian energy minister suggested that the country might deliver its output cut target of 300,000 boe/d sooner than end-April. If Russia's oil companies remain as disciplined and co-ordinated in their cuts in February and March, then the target of 10.947 million boe/d could be reached, at least on paper, by end-March. Or even earlier.

The headline news on an accelerated cut in Russia's output might please the oil markets, which have started to feel uneasy about the level of oil supplies.

Russia is also likely to be co-operate with Opec's move to roll over output cuts for another six months. We might hear some obligatory statements from Russian oil officials on how tough and burdensome such a decision could be for the Russian oil industry, but it might not be more than ritual chanting. 

Again, the rollover is likely to be greeted by the oil markets as bullish news, as it would lead to Opec cutting its estimates for the Russian oil output for 2017. Currently, Opec assumes that Russia will produce 10.98m boe/d in Q1 2017, 10.97m boe/d in Q2 2017, and then output will rise in the second half of 2017 to average 11.05m boe/d in 2017. 

The cut in oil production in Russia has been supplemented by a cut in oil data which is made public. The oil industry statistical agency CDU TEK has stopped releasing daily output numbers on its website. The monthly output by Russian companies has been reported by the Russian news agencies for years, but there is no such information for January. CDU TEK, which sells the data, must have become much more strict these days on its dissemination.

In mid-January, it was reported that all Russian major oil companies except Surgutneftegas have cut output in 2017. Rosneft led with the most significant reduction, followed by Lukoil. It is hard to verify, as Tatneft and Surgutneftegas are the only two companies that publish monthly output data on their websites.

We might need to wait for the official first quarter results to be able to get the public data on Russian companies' output. Meanwhile, the Russian ministry energy is likely to keep busy delivering good news rather than hard facts to the oil markets. 


It may be February, but maybe we could get away with telling them it's May. Photo: Shutterstock

— Edited by Martin O'Rourke

Nadia Kazakova is a specialist on Russia, particularly the oil and gas sector
Philidor Philidor
Loving the sarcasm.


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