Page 9 - RusRPTDec18

Russia’s October crude production result actually represents a new post-Soviet high, but currently US oil production is growing faster than Russia’s. In October, Russia crude production also reached a record high, at 11.36mmb/d, according to CDU TEK data, which was 2% below the latest US daily production estimate.
“This implies production growth of 0.44mmb/d (+4.0%) since May, when it started growing. To recap, in June OPEC+ members eased the production cut and Russia agreed to increase production 200kb/d from June levels,” VTBC reports.
Russia is setting new production records at a time when the average oil prices has risen from the 40s in 2017 to around $75 in the second quarter of this year, making Russia’
The next OPEC+ meeting is scheduled for 4 December.
A re-benchmarking that raised estimated production volumes 415kb/d accounts for the weekly growth in the US. Although the Alaska crude production estimate remained flat at 448kb/d, production in the lower 48 states increased 0.4mmb/d to 11.1mmb/d week over week. Therefore, according to the EIA data, not only has the US hit a record high crude production level, but has also become the world’s largest crude oil producer. Apart from that, the US NGL liquids production estimate increased to 4.4mmb/d (+17% y/y).
2.3 Asia overtakes Europe as Russia’s biggest oil customer
Asia has overtaken Europe as Russia’s biggest market for oil. Russia's largest oil company Rosneft supplied 43.1mn tonnes of oil to Asia in January- September 2018, beating exports to Europe that amounted to 41mn tonnes. Rosneft supplied 15.7mn tonnes to Asia in the third quarter alone, or half (48%) of its total exports, and 13.1mn tonnes to Europe (40% of total).
Asia has been growing in importance as a market for Russian oil since 2003, when the Kremlin took over the privately owned Yukos oil company. As bne IntelliNews has already reported Russia is reorienting its supplies of low sulphur oil from the West to China, which upset European refineries receiving Urals oil blend of poorer quality.
The gap between European and Asian supplies has been closed fast, as in 2017 still Europe imported 65.3bn tonnes of oil from Rosneft versus 47.7mn tonnes for Asia. China is the major buyer of Rosneft's oil (a business started by Yukos), with about 40mn tonnes supplied in 2017, that is slated to increase to
9 RUSSIA Country Report December 2018 www.intellinews.com