Article / 05 July 2016 at 9:15 GMT

Russian oil output edges up in June as price firms

Russia oil and gas expert
United Kingdom
  • Russian oil output edges up in June to 10.84 million b/d
  • Output still at historically high levels close to 11 million b/d
  • Rosneft output slides beneath 4 million b/d target
  • There may be some political pressure to keep output high
 Russian oil output continues near the 11 million b/d mark. Photo: iStock

By Nadia Kazakova

Crude oil and gas condensate output in Russia was 10.84 million barrels/day in June. It is up 1.4% on last year and 0.15% higher than in May 2016. After a spike in the first quarter of 2016 at above 10.9 million b/d the oil output has now stabilised at around 10.84 million b/d in Q2 2016. 

Russian crude oil and gas condensate output in June 2016, million b/d


Exports stayed at above 5 million b/d in June, up 4.7% year-on-year. There was, however, a noticeable drop of 3.4% month-on-month. Oil and gas companies have shipped more oil to refineries in June, almost the same amount at last year (only down 0.93% y/y after a 7.6% y/y drop in May) and up 4.7% m/m. It might have been a combination of firmer domestic margins and some increase in domestic demand. 

The output by company was relatively stable, with some monthly losses for Rosneft and Lukoil. Both companies had a 0.35% m/m drop in output, offset by slight monthly gains from GazpromNeft and Bashneft. 

It is a bit of a disappointment to see Rosneft output to drop below 4 million b/d (reported number covers main subsidiaries, not fully consolidated). But it is probably too early to see it as a failure of the company to deliver on its promise to start increasing production from May onwards.

Crude oil and gas condensate output by company in June 2016, million b/d

There was actually very little movement in Russian oil output throughout Q2 despite rising oil prices. The production was actually off its January peak when the Urals oil price averaged under $29/b.

The usual explanation is that Russian production is dominated by larger oil companies with rigid development plans, marginal fields are kept in production regardless of the oil price due to infrastructure/cost constraints and the margins are satisfactory due to rouble devaluation.

Russian crude oil and gas condensate output and average Urals oil price

There might be also some political pressure to keep output at a certain level to meet budget revenues targets. It would mean that oil companies would have higher than expected and probably less efficient (for the level of the oil price) capital expenditure in the coming years (if the oil price remains at around $50/b). 

It is something to watch for, as it would affect company cash flows, their ability to maintain dividends and, as a result, their valuations.

 There may be some political pressure on oil companies to keep output high. Photo: iStock

— Edited by Martin O'Rourke

Nadia Kazakova is an expert on Russia


The Saxo Bank Group entities each provide execution-only service and access to permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on or as a result of the use of the Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. When trading through your contracting Saxo Bank Group entity will be the counterparty to any trading entered into by you. does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of ourtrading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws. Please read our disclaimers:
- Notification on Non-Independent Invetment Research
- Full disclaimer
- 沪ICP备13028953号-1

Check your inbox for a mail from us to fully activate your profile. No mail? Have us re-send your verification mail