MOSCOW Oct 18 Renaissance Capital brokerage
said on Thursday it had cut its Russian oil output forecast for
2007 for a second time this year and saw minimal growth in 2008.
The brokerage, which had in the past issued aggressive
forecasts for Russian oil production, said growth would amount
to 2.5 percent this year, down from the previously forecast 3.2
percent and the initial 3.7 percent.
"We believe this was driven by the delayed drilling campaign
earlier this year, when unusually warm weather held back
ice-road building, pad construction and rig mobilisation,"
Renaissance said in written research.
Excluding the Exxon Mobil's (XOM.N) Sakhalin-1, daily crude
output in Russia, the world's second biggest crude exporter
after Saudi Arabia, has been down year-on-year since May, it
"Sakhalin-1 had a weak month in September. Assuming this
project returns to full capacity and that the rest of Russia
behaves seasonally... overall output will rise by 2.5 percent
to 492.4 million tonnes," it said.
This would translate into 9.89 million bpd under Reuters
calculations, if using a conversion ratio of 7.33 barrels to a
tonne. Renaissance uses a ratio of 7.3 which translates into
9.85 million bpd.
In 2006, Russian oil output growth stood at 2.2 percent, the
lowest figure since 2000, with production amounting to 9.65
If Renaissance Capital's forecast materialises it will mean
Russia would add around 240,000 bpd to global oil supply.
Going forward, Renaissance expects production to rise by a
mere 1.3 percent in 2008, mainly on the back of bigger
production from the Sakhalin-2 project.
"We believe the commissioning of the oil pipeline to
Yuzhno-Sakhalinsk will add 50,000 bpd to current seasonal
capacity of 70,000 bpd, typically from May to November, and that
full capacity of 170,000 bpd will be achieved in tandem with the
first LNG deliveries to customers," it said.
In 2009, production would expand by a healthier 2.1-2.4
percent as the country will put its first East Siberian fields
on stream, following completion of its first pipeline to Asia.
The brokerage said Russian oil firms' spending will remains
focused on greenfield projects and it was concerned by the
rapidly expanding capital and operating costs.
"We fear that Russia's existing fiscal regime will kill the
goose unless it is tweaked further".
"Fortunately, Russia seems unique around the world, having
lowered crude production taxes earlier this year, and we expect
more such moves after the electoral cycle is over (after March
2008)," it said.