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
(Click to enlarge)
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
More Top Reads From Oilprice.com:
James Burgess studied Business Management at the University of Nottingham. He has worked in property development, chartered surveying, marketing, law, and accounts. He has also… More
Comments
Mexico is in a investment-caused heavy decline but also exports larger amounts of oil, but needs to re-import ready oil products, because the Mexican population growth together with need for more Energy also leads to more Cars, and fuel efficiency saves a bit yes, but it can't beat millions of new cars coming soon from Firstbuyers (while people who sell their car and buy a new one have to ... these 3 Nations form the NAFTA!
Now the us oil shale came and reduced the US imports of crude oil and products very very strong. The Peak Year of 1970 was not far away in the Summer 2014 when the prices dropped an operations/investments/exploration and so on were reduced... the OPEC wants to deliver that 4 to 5 Million Barrels which were lost due to fracking and horizontal drilling and shale oil of course...
but the US production decline is very very slow, much much slower than thought by many, especially in the OPEC they said in May 2015 it should start to reduce strongly... but we are in June 2016 still with a bit over 8.7 million barrels production, to compare: 4th January Week 2006 the production was 4.862 million barrels. The production of 1st June Week was 8.745 million... today new data comes, but in L.A. some people are driving to work or so...