Russia’s Oil Output Down to 11-month Low After Dirty Oil Scandal

Russian oil output fell to 11.11 million barrels per day in May, its lowest level since June 2018, from 11.23 million bpd in April, Energy Ministry data showed on Sunday, according to News.

The country’s Druzhba pipeline, which usually ships one million bpd, or 1 percent of global oil demand, has been out of service after a serious oil contamination scandal last month.

As a result, Russian oil production during May fell by more than stipulated in a global deal with the Organization of the Petroleum Exporting Countries (OPEC).

The Energy Ministry data showed Russian oil pipeline exports in May fell to 4.209 million bpd, from 4.494 million bpd in April, as supplies via the Druzhba pipeline almost dried up, while seaborne exports jumped by 11.5 percent.

Russia expects to clean up the pipeline, which was built in the 1960s and carries Russian oil to Europe, including Germany, Hungary, Poland, and Slovakia, within six to eight months. June 2018 production was 11.06 million bpd. In tonnes, oil output reached 47.004 million in May versus 45.975 million in April, which is one day shorter than May.

Russia’s largest oil producer Rosneft accounted for most of the cuts, with a month-on-month reduction of 2.9 percent in May, while domestic output at Russia’s No.2 oil producer Lukoil edged up 0.7 percent last and Gazprom Neft boosted its output by 4.7 percent. Both Lukoil and Gazprom Neft have their own exporting terminals in the Arctic.

Opec and other large oil-producing countries led by Russia agreed to curb output by a combined 1.2 million bpd for six months from Jan. 1, in order to balance the global oil market. Of this, Russia pledged to cut its production by 228,000 bpd from the deal baseline of the October 2018 level, to 11.18 million bpd.