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Russia passes Saudi Arabia

Railway wagons arriving in Murmansk from the Urals with oil ready for reloading to tankers.

Railway wagons loaded with oil are queuing up in Murmansk awaiting export to western Europe. Not since the collapse of the Soviet Union has Russia produced so much oil as in 2011. That is very good news for Russian economy.

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The increase in Russia’s oil production is mainly due to new projects and boosted output from some of the existing larger oil fields.

Railway wagons arriving in Murmansk from the Urals with oil ready for reloading to tankers.
Railway wagons arriving in Murmansk from Siberia with oil ready for reloading to tankers sailing to the European market. Photo: Thomas Nilsen

With reference to the Ministry of Energy, Bloomberg reports that Russia’s average daily output reached 10,27 million barrels per day in average last year. The year-to-year growth was 1,25 percent. The production in November and December 2011 was even higher, reaching 10,35 and 10.32 million barrels per day for the two last months of the year.

Itar-Tass reports that with the increased production, Russia managed to retain the position as the largest oil producer in the world in 2011. The news-agency bases its statement on the November figures, as Saudi Arabia has so far not calculated its final 2011 production. Saudi Arabia’s November figures showed an average daily production of 10,05 million barrels.

The increase in oil production is very good news for Russian economy. The increase comes in addition to a sharp increase in oil prices in 2011. According to price data compiled by Bloomberg, the average price for Urals crude, Russia’s benchmark grade, for delivery to northwest Europe increased by 40 percent to $109,30 a barrel.

Economy expected to rally in early 2012
Talking to reporters before Christmas, Russia’s Minister of Economic Development Elvira Nabiullina said she expects the economy to rally in early 2012 and to fully overcome the crises setback from 2011.

Commenting on 2011, Nabiullina said that the results of the year can be estimated as good, in spite of external turbulence and what’s happening on world markets.

Russia cut the tax rate on crude oil export on October 1st last year in an attempt to give incitements to the industry to boost production even more.

More of the Russian oil was sold to Asia and especially Japan following the Fukushima nuclear disaster in March, but also the civil war in Libya increased the demand.

Although increase in export, slightly less oil was last year sent to Europe by tankers from Murmansk and the White Sea area, as previously reported by BarentsObserver.

Plans however outlines increase in oil export from Murmansk. The ice-free harbor on the Kola Peninsula is used both for ship-to-ship reloading for oil coming from the Varandei terminal and for oil coming by rail from the larger oil fields in western Siberia.

Read moreOil traffic capacity of 100 million tons

Both Norway and Russia have planes to boost oil production in the Barents Sea after the newly agreed maritime delimitation line between the two countries entered force last summer. Norway’s Goliat field outside the coast of Finnmark and Russia’s Prirlazlomnoye field in the easter Barents Sea will soon start production.