Russia's August Oil Production Rises

Russian oil output rose 1 percent in August to 10.52 million barrels per day (bpd), supported by an increase in condensate production at Gazprom and projects with foreign companies, Russian Energy Ministry data showed.

Production in Russia, which includes crude oil and gas condensate, was still the world's highest in August. Its closest peer, Saudi Arabia, produced an average 9.75 million bpd last month, a Reuters survey showed.

Western nations have imposed sanctions on Moscow over its annexation of Crimea in March and its stance over the war in eastern Ukraine, warning of further measures if Russia does not help to stop the conflict escalating.

The measures include a ban on investments into new equity or debt with a maturity longer than 90 days for a number of Russia's largest companies, as well as on exports of equipment for new oil projects.

But sanctions have not yet hit oil production as the measures are aimed at new projects which are years away from coming on stream. But as external western funding is closed off or becomes too expensive, companies are already looking to cut investments.

The ministry data showed production at state-controlled Gazprom jumped by 36 percent month-on-month to 306,000 bpd. Output at projects under production-sharing agreements (PSA) rose 12 percent to 241,000 bpd.

There are three PSAs in Russia - the Total-led Kharyaga project, ExxonMobil -led Sakhalin-1 and Gazprom-controlled Sakhalin-2.

Alexander Kornilov, an analyst with Alfa Bank, said that Gazprom was just returning to usual condensate production levels after a drop in July following maintenance works.

Gazprom's Surgut plant was out of operation for most of July.

Valery Nesterov, an analyst with Sberbank CIB, said that monthly production at PSA projects is volatile because of maintenance issues, including at some offshore production platforms. In June, it was 303,000 bpd.

Rosneft and Exxon plan to start production at another Sakhalin-1 project, Arkutun-Dagi, by the end of this year, which will add 90,000 bpd within three years to Russia's total output.

In tonnes, Russian oil output reached 44.472 million in August versus 43.949 million in July.

Gas production was 42.74 billion cubic metres (bcm) last month, or 1.38 bcm a day, versus 42.68 bcm in July. State-controlled gas producer Gazprom produced 26.28 bcm, or 848 mcm per day, in August, down from 26.72 bcm a month earlier.

Reporting by Katya Golubkova