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Oil Output Remains World's Highest

Russian oil output edged down in April but remained near record levels and well above 10 million barrels per day for the eighth consecutive month, allowing Moscow to retain the world's top position ahead of Saudi Arabia.

Energy Ministry official data showed on Sunday that April oil output stood at 10.11 million barrels per day, the second best result ever and down only slightly from a record-high of 10.12 million bpd in March.

The country added 260,000 bpd to its production, or more than 2.6 percent year on year — equal to output rises during some of the best years of its steep output growth this decade, which saw Russian output rising by nearly 70 percent since 1999.

This high level has been a worry for the Organization of the Petroleum Exporting Countries, which agreed on output targets for most of its members in December 2008, restraining production to support prices.

OPEC leader Saudi Arabia was pumping about 8.05 million bpd of crude in April, holding spare capacity of about 4 million bpd.

Russia, which has flirted with OPEC on output cuts in late 2008 during a steep fall in oil prices, decided against cuts as soon as prices started to recover to quickly fix budget gaps.

Roughly 60 percent of the nation's budget revenue comes from taxes on oil and gas sales.

On Friday, oil prices rose for the third month in a row as higher economic growth in the United States and hopes of a bailout to help Greece avoid debt default sparked more risk-taking.

Russian output has been rising on the back of production at newly tapped East Siberian fields, which, according to JPMorgan forecasts, will account for 2.3 percent of Russia's crude extraction in 2010, up from about 1.1 percent in 2009.

Oil major Rosneft has been the leader of growth with its giant Vankor field adding new barrels, followed by BP's Russian venture TNK-BP, which boosted output 3 percent in April, year on year, also because of greenfield projects.

Midsized oil firm Bashneft has also surprised the market with steady growth over the past months after years of stagnant production as its new owner, Sistema, has increased production rates at existing wells.

Overall output growth is expected to slow in the second half of the year as output additions in East Siberia will be offset by declining production in West Siberia.

Oil exports via pipeline monopoly Transneft also edged down in April to 4.27 million bpd from 4.30 million bpd in March.

Exports are expected to rise as Russia boosts capacity at its new Pacific oil terminal of Kozmino, launched late last year.

Natural gas production continued its decline amid falling demand in Europe and at home because of warming temperatures and the end of the heating season.

Overall gas output fell to 1.87 billion cubic meters per day in April from 1.94 bcm per day in March and 2.07 bcm per day in February.

Gazprom also cut production to 1.48 bcm per day from 1.53 bcm per day in March and 1.63 bcm per day in February 2010, data showed.

But both Gazprom and Russia overall boosted output by over a quarter from April last year, when Gazprom was facing demand destruction in Europe because of crisis-hit consumption and abundant supplies of rival cheap liquefied natural gas.

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