Russia ends 2015 with weekly oil production setting a record

Sakhalin II, offshore platform, Russia
Sakhalin II, offshore platform, Russia

Russia’s oil output is poised to reach a post-Soviet record of 10.86 million barrels a day this week as the nation’s producers continue to withstand the slump in prices, according to Energy Ministry data.

The country’s crude and gas condensate production for the whole of December is on track to average 10.783 million barrels a day, almost matching November’s record of 10.785 million, according to Bloomberg estimates based on the data.

Oil is poised for its biggest two-year loss on record in New York as an expansion in U.S. crude stockpiles and rising production from Russia and the Organization of Petroleum Exporting Countries exacerbate a global glut. Russian companies have been helped by a weaker ruble that reduced the cost of services such as drilling, and a tax system in which the state bears most of the risk and reward from price movements.

“Both OPEC and non-OPEC producers have failed to budge in spite of low prices,” Ehsan Ul-Haq, a senior staff consultant at KBC Advanced Technologies Ltd., said by e-mail. “As far as oil prices are concerned, things could get worse before they start improving again.”

West Texas Intermediate futures have lost 31 percent this year following a 46 percent drop in 2014, exceeding the magnitude of the slump after the Asian economic crisis from 1997 to 1998.

Russia’s December output was boosted by the OAO Novatek-led Yargeo venture’s Yarudeyskoye field, which started producing on the first day of the month, according to a statement from the company. Output from the deposit will rapidly reach 70,000 barrels a day, the company said Dec. 1. Novatek didn’t immediately reply to a query about current output form the unit.