August 2, 2018 / 7:59 AM / 8 months ago

UPDATE 2-Russian oil output up 150,000 bpd in July as Moscow pledges market stability

    * Russia raises oil output in July above 200,000 bpd pledge 
    * Novak has said increase needed for market stability
    * Russian oil output at 11.21 mln bpd in July - data 

 (Adds details, quotes, background)
    By Katya Golubkova
    MOSCOW, Aug 2 (Reuters) - Russian oil output rose by 150,000
barrels per day (bpd) in July from a month earlier, surpassing
the amount Moscow had promised to add following a meeting of
global oil producers in Vienna in June, energy ministry data
showed on Thursday. 
    Under an initial deal between OPEC and non-OPEC producers,
Moscow had agreed to cut 300,000 bpd from the production level
of 11.247 million bpd Russia reached in October 2016. 
    When oil prices subsequently rose, the producers decided on
June 22 to increase their combined output by 1 million bpd, of
which Russia was to contribute 200,000 bpd starting on July 1. 
    According to the ministry data, Russian oil production rose
to 47.429 million tonnes in July versus 45.276 million in June.
In barrel terms, output reached 11.21 million bpd, up from 11.06
million bpd in June.
    That brings the combined Russian increase to 263,000 bpd
compared to the initial cut agreed two years ago. According to
the energy ministry's data, which excludes some of the companies
units, almost all Russian firms showed an increase last month.
    Russian Energy Minister Alexander Novak said on Wednesday
higher production by Moscow was aimed at "maintaining stability
of the (global) oil market within the framework of joint actions
of OPEC and non-OPEC countries."              
    Initially, OPEC and non-OPEC producers agreed on a combined
reduction of 1.8 million bpd. However, lower production by a
number of countries deepened the cuts, raising fears of global
oil shortages and a potential spike in prices. 
    At the June 22 meeting, OPEC agreed to boost output by
returning to 100 percent compliance with the oil output cuts
that took effect in January 2017, after months of
underproduction by countries including Venezuela and Angola. 
    Last week, Novak said Russia planned to increase its
production by 200,000-250,000 bpd and that the OPEC+ group led
by Russia and Saudi Arabia would meet in September to discuss
the current deal. 
    Sources told Reuters last month that Russia has used stocks
held in tanks at its oilfields to boost production, yet, the
specific amount which may have been used was unknown. Sources
estimated that Russia has a combined spare capacity of around
200,000 bpd which may be used to hold oil stocks.              
    Although not large compared to some countries such as the
United States, which may release stocks to bring oil prices down
if needed, it shows Russia still has supply flexibility. 
    Novak said last week that Russia did not have a huge spare
capacity to hold stocks like the United States but added that
Transneft, the state oil pipeline monopoly, had spare capacity
for "technological processes". He declined to give figures. 
    The Energy Ministry also said gas production in July came to
53.92 billion cubic metres (bcm), or 1.74 bcm a day, versus
53.57 bcm in June. On Wednesday, Russia's Gazprom           said
separately its gas production last month was at 36 bcm. 

 (Reporting by Katya Golubkova
Additional reporting by Oksana Kobzeva and Denis Pinchuk;
Editing by Dale Hudson/David Evans)
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