Moody's says Russian oil production last month was the highest since the collapse of the Soviet Union in the 1990s. Photo by Calin Tatu/Shutterstock
MOSCOW, Oct. 27 (UPI) -- A ratings agency assessing the profitability of Russian energy companies said oil production for September reached a post-Soviet high.
A profile of Russian energy companies from Moody's Investors Service said low production costs are paying off.
"In September 2016, Russian oil production reached 11.1 million barrels per day, a new post-Soviet record-high," the report read.
Russian Energy Minister Alexander Novak last month met with his counterparts from major oil-producing countries to review strategies to pull the market back into a healthy balance between supply and demand. About a week before members of the Organization of Petroleum Exporting Countries agreed on a proposal for a production ceiling, Novak said there were no considerations for a cut in output from Russia.
Denis Perevezentsev, a senior credit officer at Moody's, said companies like Russian oil major Rosneft should be in a strong position assuming oil prices hold at an average of $45 per barrel next year.
"We expect the profitability of Russian oil and gas companies to stay robust," Perevezentsev said.
Sanctions and lower crude oil prices put pressure on the Russian economy. Moody's said that, as far as sanctions are concerned, most Russian energy companies were shielded by a look toward the domestic market and state-controlled banks.
Moody's said Russian oil and gas companies should remain strong at least for the next 12 months because of good cash flow from existing operations and positive cash balances. Russia's deputy energy minister, meanwhile, said this week that investments in the Russian oil sector are expected to expand in comparison to last year, though nothing is certain for 2017.
Meeting with Russian President Vladimir Putin this week, Prime Minister Dmitry Medvedev said the budget was based on oil priced at around $40 per barrel.