MOSCOW, Oct 18 (Reuters) - 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 said.
“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 million bpd.
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.