Russia is set to increase crude oil output by around 8 million tons or 185,000 bpd by then end of this year, according to the Russian Energy Ministry.
Speaking to Russian TASS news agency, Energy Minister Alexander Novak said Friday that the country’s crude production forecast to a total of 540-542 million tons, for the 8-million-ton increase.
This is compared to Russia’s 2015 production of 534 million tons or roughly 4.5 billion barrels of oil.
Russia managed to surprise analysts by keeping production at high levels throughout what many now see as the bottom of the oil bust. Below chart shows the soaring Russian oil output in the last months and the 7 percent output drop in April confirmed by the Russian Energy ministry. Related: Could A New Type Of Bike Solve India’s Electricity Problems
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Even though many now expect Russia’s crude production to remain resilient throughout 2016, especially as oil prices rebounded from February lows. The main question however is how much more crude Russia pump up. Independent consultancy Vygon Consulting expects crude output to grow this year and throughout 2017. Forecasting an output of a whopping 11,3 million bpd, very close to the all-time high reached in 1987.
This output level will however only be reached if Russia manages to effectively use enhanced oil recovery techniques to stem decline from its Siberian oil fields and continues to see good results from greenfields. Related: Why $50 Oil Makes Sense
Russia’s refining capacity won’t change much in 2016 as Novak said the refinery forecast remained the same, at 275 million tons.
Novak conditioned the forecasted increase on “dynamics” remaining unchanged until the end of the year.
Novak also chimed in on oil prices, saying that prices may stick in the range of $40-$60 per barrel through the end of this year, but “probably around $50 …”
The Russian energy minister also told reporters on Friday, in the aftermath of the Thursday OPEC meeting in Vienna, that “verbal interventions” are not likely to play a significant role in oil prices going forward.
"I think it is unlikely that verbal interventions play a significant role. Now fundamental factors have already come into force. We see that the supply is not growing now, for the first time, in the first quarter, and sometimes also in the second quarter, and there are many different factors, including, reduction of investments in the industry, which is observed in the last two years. It is certainly not a typical situation that we see now - fires in Canada, diversions at the oil facilities in Nigeria, Iraq. This also affects…" TASS quoted Novak as saying.
"Of course, this is a short-term factor, however, today we see that there is no imbalance and so the price has been adjusted on the basis of fundamental facts," Novak said.
By James Burgess of Oilprice.com
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