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Russia news roundup

Russia's oil producers are proving their resilience to the global downturn in crude prices, with the country poised to deliver record production figures for October. Russia has also been tipped to remain as Europe's leading supplier of natural gas, while away from the European market, Gazprom looks set to concentrate on boosting supply to Asia.

Russia set for record oil production

Already the world's largest oil producer, Russia is set to post record output figures for October, according to new estimates based on figures from the energy ministry.

Provided by Bloomberg, the data indicates that production for the month is on track to reach 10.77 million barrels per day, exceeding September's revised figure and establishing a new post-Soviet record for the second successive month.

Russia has bucked the trend of falling global oil output in the wake of declining prices, while the US has seen its output drop by five per cent since its June peak. This is in part thanks to the weak value of the rouble, which effectively provides Russian producers with a buffer against the slump.

Artem Konchin, an oil and gas analyst at Otkritie Capital in Moscow, told Bloomberg: "Russian oil companies are insulated from oil price corrections. 

"Through the tax framework, the government took the brunt of the blow, just as it used to take most of the windfall profits. The rest of the story is in the rouble depreciation."

Russia 'to remain Europe's leading natural gas supplier'

As well as continuing to deliver strong oil production figures, Russia has been backed to remain the leading player in the European gas market.

Charif Souki, chief executive of US-based Cheniere Energy, believes Russia will maintain its position in Europe - despite his company's own ambitious export plans.

Cheniere is set to produce its first batch of liquefied natural gas (LNG) for overseas export in the coming months, with export output volumes from its Sabine Pass terminal expected to reach 60 million metric tons per year by 2025.

Despite these bullish plans, Souki insisted: "Russian gas will still be the dominant player in Europe.

"Cheniere's entry into Europe won't dent [LNG] prices there ... I don't see us as price makers," he was quoted by CNBC as saying.

Medvedev: Gazprom to focus on Asian market

Gazprom will continue targeting Asian buyers for LNG, according to Alexander Medvedev, deputy chairman of the company's management committee.

Overall demand for gas in Asia is set to pass 400 billion cubic metres per year by 2025 - significantly above the current total of gas imports, which stands at approximately 280 billion cubic metres per year.

Medvedev cited the 30-year pipeline deal with China National Petroleum Corporation and the expansion of the Sakhalin-2 oil and gas development as examples of Gazprom's focus on the Asian market, reports ICIS.

As well as continuing to target its traditional customers in Japan and South Korea, Gazprom will look to expand into new and niche markets across Asia, the Middle East and South America.

Russia offers Iran gas and oil swap deals

Gazprom has offered a gas supply swapping arrangement to Iran, and similar oil deals are also being considered.

Alexander Novak, Russia's energy minister, said Iran typically supplies its northern regions from the south of the country, reports Reuters. As such, the swap deals would help to cut transportation costs.

Speaking to state-run TV network Rossiya-24, he explained: "We could supply gas through to Iran's north and receive gas from the south [of Iran] via swap deals in the form of liquefied natural gas or pipeline gas.

"Similar swaps could be done with oil. This is a reduction of transportation costs. Our colleagues have given a positive response to the idea."

L1 Energy splashes out $1.6bn on North Sea oil

Russian-owned oil company L1 Energy has bought oil and gas fields in the Norwegian North Sea for $1.6 billion.

L1's deal to purchase assets held by E.ON has already been ratified by Norwegian regulators and the EU. It means the investors now hold 43 mining licences in the area, making them the owners of the largest oil and gas fields in the North Sea.

Ivan Kapitonov, associate professor of the Institute of Civil Service and Management at the Russian Presidential Academy of National Economy and Public Administration, said: "This is the largest transaction conducted by a business under the control of Russian businessmen in recent years."

According to Russia Beyond the Headlines, Kapitonov believes L1 is now poised to become a major player on the global oil and gas stage.


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