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RPT: Russian gas output collapse deepen in April

Posted on: May 5, 2009

Reuters – Monday, May 4

* Gazprom’s April output down 28 pct year-on-year

* Oil production continues growing, up 1.3 pct year-on-year

* Oil exports up 3.6 pct vs March, down 3.3 pct vs April 08

By Simon Shuster

MOSCOW, May 2 – Natural gas production at Russian gas giant Gazprom <GAZP.MM> fell by more than a quarter last month to the lowest levels in a decade, continuing its spiral downward in response to plummeting European demand.

Oil extraction, however, continued to climb in April despite concerns that the lower oil price and lagging investment would lead to a repeat of last year’s decline, data from the Russian Energy Ministry showed on Saturday.

In April, Gazprom’s gas output was 1.15 billion cubic metres per day, 7 percent down from 1.24 bcm in March 2009 and 28 percent down from 1.60 bcm in April 2008, the data showed.

Analysts say such low production levels have not been seen in a decade, but they predict a recovery in the second half when gas prices are expected to catch up with the lower oil price, which they follow after a lag of six to nine months.

For now, cash-strapped consumers are delaying purchases until gas is cheaper, and switching to alternative fuels.

Around 80 percent of Russian gas output comes from Gazprom, which supplies a quarter of Europe’s gas and is the world’s largest producer of the fuel. The rest is produced by smaller independent gas firms or oil majors.

Novatek <NVTK.MM>, Russia’s second-largest gas producer, extracted a total of 2.5 bcm of gas in April, flat year-on-year and slightly down from March 2009, the data showed. The firm had planned to increase output by 10 percent this year.

Gazprom, which controls all trunk pipelines in Russia, has said it would ask independent producers to cap output to share the pain of lower demand.

Russia’s total gas output in April was 1.47 bcm per day, down 7 percent from 1.58 bcm per day in March and 23 percent less than the 1.92 bcm per day produced in April 2008.


The data showed oil output meanwhile increased 0.5 percent to 9.85 million barrels per day last month from 9.8 million in March and up 1.3 percent from 9.72 million bpd in April of 2008.

Russia’s oil output has surprised experts in recent months, inching upwards despite expectations it would fall as a result of low energy prices and a reduction in upstream investments.

Oil production in Russia, the world’s No. 2 exporter, fell by about 1 percent last year because of ageing reserves and plunging oil prices. The decline is cause for concern in a country highly dependent on oil export revenues for its budget.

Pipeline oil exports stood at 4.37 million bpd in April, an increase of 3.6 percent from 4.22 million bpd in March but down 3.3 percent from 4.52 million in April of last year.

State oil major Rosneft <ROSN.MM>, the country’s top oil producer, kept output flat last month compared to April 2008.


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