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Russia's Lukoil reports oil production declines for 2016

Fourth quarter production for one of Russia's largest energy companies increased 2.5 percent.

By Daniel J. Graeber
Russia's Lukoil reports oil production declines for 2016
Russian oil producer Lukoil reports full-year 2016 production declines, but slight gains during the fourth quarter. Photo by Calin Tatu/Shutterstock

March 2 (UPI) -- Russian oil producer Lukoil said its oil production for 2016 was 8.6 percent lower than in 2015, but higher for the fourth quarter by about 2.5 percent.

Excluding work in Iraq, Lukoil reported the full-year 2016 production of 674 million barrels was a 9 percent decline year-over-year. Fourth quarter production was reported at 162 million barrels, up 2.5 percent from the previous term.

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Lukoil in a statement said its production from the fourth quarter excluded volumes from the West Qurna-2 project in Iraq. Production there saw dramatic declines both in year-on-year figures and for the fourth quarter.

"Oil production dynamics outside of Russia were influenced by the divestment of our share in Caspian Investment Resources Ltd. in Kazakhstan in 2015, as well as a decrease in compensation crude oil volume from the West Qurna-2 project," the company said.

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About 95 percent of total Lukoil production volumes come from reserves in Russian territory.

Russia is party to an agreement steered by the Organization of Petroleum Exporting Countries that calls for managed production declines in an effort to bring a market flush with crude oil back to balance. Russian rhetoric on the arrangement during the negotiation stages last year was fluid, though the official line is one of compliance.

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OPEC reports compliance with the agreement at around 90 percent, with Saudi Arabia leading the declines among member states. Stephen Brennock, an analyst with broker PVM, said in an email earlier this week that Russia is lagging behind its oil-producing peers.

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"As OPEC shows sign of making sustained headway in curbing output, the same can't be said for Russia," Brennock said.

Total Russian oil production for February was reported at 11.1 million barrels, relatively unchanged from the previous month. Total 2016 production was higher than the previous year.

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