Russian liquids growth slows in November

Russian crude and condensate output growth slowed in November after rising significantly in the previous couple of months, suggesting that Russian oil producers may be reaching the limits of spare capacity after restoring much of the production that was cut under the Opec+ deal.

Production was 1.485mn t/d in November, according to state-run news agency Tass, citing preliminary data from the energy ministry's CDU-TEK information agency. Liquids production was 1.479mn t/d in October, the ministry said earlier. Using a 7.3 bl/t conversion factor, this puts output at 10.84mn b/d in November, or just 40,000 b/d above October.

The relatively moderate output increase suggests Russian producers are getting close to capacity. The scale of any crude production growth next year will depend on the productivity of new wells, including those drilled this year, according to several major Russian oil firms.

The energy ministry does not give a breakdown of crude and condensate. But based on the preliminary data for overall liquids output, Russia was possibly slightly more compliant with its Opec+ commitments in November than in the previous months.

The Opec+ agreement puts limits on crude output but does not restrict condensate production. Russia's crude quota was 9.91mn b/d last month, up from 9.81mn b/d in October. Argus estimates that Russia was 100,000 b/d above its October ceiling and was on average 90,000 b/d above its quota in January-October.

Moscow's target for December is over 10mn b/d. The Opec+ group is meeting tomorrow to discuss January quotas.

In the early months of 2020, before Covid-19 had taken hold globally, Russia was producing 10.5mn b/d of crude, according to energy ministry data. Total liquids production in Russia was 11.3mn b/d in January-April 2020, before the start of the current Opec+ deal.

Russia's largest private-sector oil producer Lukoil said in November that it still had 30,000-40,000 b/d of spare capacity but it expects that to be on stream by late January or February 2022. State-controlled Rosneft and Gazpromneft are even closer to the limit of what they can add. Rosneft said last month that it had brought on line all of its spare capacity in the third quarter, while Gazpromneft said it had almost no spare capacity left.

By Anastasia Krasinskaya