Russian oil output down in January, misses global deal target

Above, a petrochemical facility being built on the outskirts of Tobolsk, at the heart of Russia’s Siberia. (AFP)
Updated 02 February 2019
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Russian oil output down in January, misses global deal target

  • Rosneft, the world’s largest oil producer by output, reduced its production by 0.1 percent last month from December
  • Russia has pledged to cut its production by around 230,000 bpd in the first quarter

MOSCOW: Russian oil output declined to 11.38 million barrels per day (bpd) in January, or by around 35,000 bpd from the October 2018 level, the baseline for the global oil accord, missing the deal’s target, Energy Ministry data showed on Saturday.
This was down from 11.45 million bpd in December, a record monthly high. In tons, oil output reached 48.113 million versus 48.442 million in December.
Russian oil pipeline exports in January fell to 4.313 million bpd from 4.496 million bpd in December.
Rosneft, the world’s largest oil producer by output, reduced its production by 0.1 percent last month from December, while second-largest Russian oil producer Lukoil saw production cuts of 0.8 percent.
Output at Rosneft’s largest unit, RN-Yuganskneftegaz, declined by 0.8 percent after a blaze ripped through Priobskoye oilfield in early January. Production at Gazprom Neft, the oil arm of gas giant Gazprom, edged up by 0.1 percent.
Russian Energy Minister Alexander Novak has said the country’s overall cuts would total 50,000 bpd in January from October.
The Organization of the Petroleum Producing Countries and other leading global oil producers agreed in December to cut their combined output by 1.2 million bpd in order to support oil prices and evenly balance the market.
Of that, Russia has pledged to cut its production by around 230,000 bpd in the first quarter.
Novak has also said Russia was unable to reduce oil output sharply due to technical limitations but would try to do so more quickly.
Reducing production presents a challenge because Russia’s harsh winter climate can cause wells to freeze, Russian officials and analysts have said.
According to a Reuters survey, OPEC oil supply has fallen in January by the largest amount in two years.
Russian natural gas production was at 67.43 billion cubic meters (bcm) last month, or 2.18 bcm a day, versus 67.04 bcm in December.


Gulf defense spending ‘to top $110bn by 2023’

Updated 15 February 2019
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Gulf defense spending ‘to top $110bn by 2023’

  • Saudi Arabia and UAE initiatives ‘driving forward industrial defense capabilities’
  • Budgets are increasing as countries pursue modernization of equipment and expansion of their current capabilities

LONDON: Defense spending by Gulf Arab states is expected to rise to more than $110 billion by 2023, driven partly by localized military initiatives by Saudi Arabia and the UAE, a report has found.

Budgets are increasing as countries pursue the modernization of equipment and expansion of their current capabilities, according to a report by analytics firm Jane’s by IHS Markit.

Military expenditure in the Gulf will increase from $82.33 billion in 2013 to an estimated $103.01 billion in 2019, and is forecast to continue trending upward to $110.86 billion in 2023.

“Falling energy revenues between 2014 and 2016 led to some major procurement projects being delayed as governments reigned in budget deficits,” said Charles Forrester, senior defense industry analyst at Jane’s.

“However, defense was generally protected from the worst of the spending cuts due to regional security concerns and budgets are now growing again.”

Major deals in the region have included Eurofighter Typhoon purchases by countries including Saudi Arabia and Kuwait.

Saudi Arabia is also looking to “localize” 50 percent of total government military spending in the Kingdom by 2030, and in 2017 announced the launch of the state-owned military industrial company Saudi Arabia Military Industries.

Forrester said such moves will boost the ability for Gulf countries to start exporting, rather than purely importing defense equipment.

“Within the defense sector, the establishment of Saudi Arabia Military Industries (SAMI) in 2017 and consolidation of the UAE’s defense industrial base through the creation of Emirates Defense Industries Company (EDIC) in 2014 have helped consolidate and drive forward industrial defense capabilities,” he said.

“This has happened as the countries focus on improving the quality of the defense technological work packages they undertake through offset, as well as increasing their ability to begin exporting defense equipment.”

Regional countries are also considering the use of “disruptive technologies” such as artificial intelligence in defense, Forrester said.

Meanwhile, it emerged on Friday that worldwide outlays on weapons and defense rose 1.8 percent to more than $1.67 trillion in 2018.

The US was responsible for almost half that increase, according to “The Military Balance” report released at the Munich Security Conference and quoted by Reuters.

Western powers were concerned about Russia’s upgrades of air bases and air defense systems in Crimea, the report said, but added that “China perhaps represents even more of a challenge, as it introduces yet more advanced military systems and is engaged in a strategy to improve its forces’ ability to operate at distance from the homeland.”