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. Last Updated: 07/27/2016

Oil Output Soars to 8.5 Million bpd

The country's pipeline oil exports fell slightly in July but still stood near last month's all-time high while oil output hit another post-Soviet peak, Energy Ministry data showed Monday.

July oil exports via the state pipeline monopoly Transneft fell by 50,000 barrels per day compared with June to 3.48 million bpd. Oil output rose to 8.5 million bpd from 8.38 million bpd in June.

Traders said that export capacity, the second largest in the world after Saudi Arabia, had reached a peak and would stay at these levels until the end of the year.

"I can't see another significant boost before Transneft upgrades Primorsk [on the Gulf of Finland] by another 240,000 bpd by the end of 2003," said a Moscow-based trader with a Western major.

The country is heavily dependent on oil export revenues and its private oil majors have boosted investments in oil production over the last five years due to high oil prices.

Oil output rose by 11 percent in July compared to the same month last year while exports rose by 13 percent year on year. Domestic oil production has risen by nearly 50 percent over the last five years.

Transneft exported a total of 12.98 million metric tons (3.07 million bpd) of Russian crude in July and another 1.75 million tons (415,000 bpd) of transit crude, mainly from Kazakhstan and Azerbaijan.

Transneft carries more than three- quarters of total oil exports. Traders estimate volumes leaving the country by rail and small ports and thus bypassing Transneft at 600,000 bpd and put real volumes of crude oil exported from and via Russia by all means and routes at above 4 million bpd.

The biggest shipping news of the month was a capacity boost at Primorsk, completed by Transneft on schedule.

"Transneft is really doing everything to cope with the rising output. These guys really know how to work," another Western trader said.

Primorsk can now load 1.5 million tons per month (360,000 bpd) compared with the previous capacity of 1 million tons. Transneft wants to turn Primorsk into the nation's biggest export outlet in 2004, able to load 1 million bpd.

The re-export of crude via the Polish port of Gdansk also reached peak levels in July as the outlet loaded 800,000 tons, compared to 750,000 in June.

The overall drop in exports was due to scheduled smaller deliveries of crude to Lithuania's oil export terminal of Butinge on the Baltic Sea, Lithuania's Mazheikiu refinery and a drop in combined railroad-pipeline deliveries.

Russia boosted exports to countries outside the Commonwealth of Independent States to 13 million tons, from 11.7 million tons in the year-earlier period.

In terms of gas, the country, the world's top natural gas producer, raised gas production to 46.3 billion cubic meters in July, from 41.9 bcm in the same month last year, the Energy Ministry said.

(Reuters, Bloomberg)