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Oil Inches Higher On Strong Crude Draw

Oil Inches Higher On Strong Crude Draw

Oil prices rebounded on Wednesday…

Gazprom Neft Launches World’s Northernmost Land Oilfield

Arctic Rig

Gazprom Neft launched commercial-scale production at the Messoyakha field, the northernmost land oilfield in the world, in the Russian Arctic. The field has swallowed US$1.3 billion in investments, and tax revenues from it are seen at some US$13.6 billion by 2040.

The field, which is being developed by Gazprom Neft in partnership with Rosneft, should yield some 600,000 tons of crude by the end of the year, equal to around 4.2 million barrels. Next year, the operators eye output of 3 million tons, to expand to 5.5 million by 2020. This would equal a daily production rate of 60,000 barrels in 2017 and 110,000 barrels in 2020.

The oil from the field, which is basically in the middle of nowhere in the northeastern Siberia region of Yamal-Nenets, will be pumped from 50 wells and fed into the Arctic-Purpe pipeline after being heated at the wellhead.

The output from Messoyakha will add to Gazprom Neft’s annual estimated output of 59 million tons of oil and condensate this year, and the planned 62 million tons next year. This, Reuters notes, is more than what Algeria is currently producing.

At the same time, the output from Messoyakha will help maintain an already record-breaking national production rate, which passed the 11-million-bpd on September 8. Average oil production in Russia is estimated to continue at this level until the end of the year, with ambitions to reach 11.1 million barrels daily.

While this will solidify Russia’s place as the world’s number-one oil producer, it reinforces questions about the point of any production freeze that might be agreed by OPEC and Russia next week in Algiers.

Deputy Energy Minister Kiril Molodstsov said earlier today that “in theory” the country could cut its daily output by 5 percent, adding that this option has been discussed with local oil companies. However, he noted that no formal agreement had been reached with any of them.

By Irina Slav for Oilprice.com

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