Oil discoveries hit a record…
While geopolitical risk definitely remains…
Russia’s Lukoil will start commercial-scale production at the Filanovsky oilfield in the Caspian Sea before the end of the month, the company said. There are already two production wells drilled at Filanovsky, together capable of yielding 4,200 tons of crude daily, or about 29,400 barrels. The crude will be pumped into the Transneft pipeline network, Lukoil’s senior vice president for production Azat Shamsuarov said.
Earlier this year, Deputy Energy Minister Kiril Molodtsov told media that annual production at Filatovsky could reach 1 million tons of crude in 2016, and 8 million tons at peak production, which is expected to be reached in 2017. In addition, the field can yield some 1 billion cubic meters of natural gas annually when full-scale exploitations begins.
The Filanovsky field was discovered in 2005, and its recoverable reserves of crude oil are estimated at 153.1 million tons. Natural gas reserves are calculated at 32.2 billion cubic meter. The budget for the field’s development has been set at around US$13.6 billion for the period 2016-2045.
In a separate announcement, Molodtsov said that Russia’s total crude oil production hit a historical record of 11 million barrels on September 8 and as of yesterday stood at 11.085 million barrels. That’s about the same that Saudi Arabia is pumping, which is also a record-high.
The news comes at a time when international oil markets are still processing the restart of exports from Libya, with the first cargo of oil since 2014 leaving the port of Ras Lanuf earlier today, bound for Italy.
Meanwhile, and somewhat ironically, OPEC and non-OPEC producers are meant to discuss a possible freeze of production at a meeting next Tuesday. Analysts have already warned that even if a freeze is agreed it won’t do much to tackle the global glut, and this becomes all the more obvious in light of this latest update on Russian production.
At such record-high daily rates of oil extraction, a freeze will have no impact on prices, at least in the short term. Not when as much as 10 percent of current production may need to be taken off markets to rebalance them.
By Irina Slav for Oilprice.com
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Irina is a writer for the U.S.-based Divergente LLC consulting firm with over a decade of experience writing on the oil and gas industry.