Novak Sees Russia Oil Output Shrinking 8%

Crude oil production in Russia could shrink by up to 8 percent this year, Deputy Prime Minister Alexander Novak said today, as quoted by RIA Novosti.

The total oil output of the country this year could be between 480 and 500 million tons, Novak said, which would be a 5-8-percent decline from 2021. But this forecast could change depending on the situation, Novak said.

Earlier this year, the Russian economy ministry forecast a sharper decline in oil production, of about 9.3 percent to 475.3 million tons, under its base scenario. This rises to 17.2 percent in the ministry's conservative scenario, or 433.8 million tons.

Novak said that the actual decline in production would be smaller, noting that in April, Russia's oil output declined by about 1 million bpd and is already recovering. Novak added that the recovery would likely continue.

According to analysts, Russia's oil output could yet shed as much as 3 million bpd in the second half of the year as a result of sanction action from the West. The sanctions will also continue to affect production trends in the future, too, as there is virtually no chance of the sanctions being lifted anytime soon.

Rosneft, Russia's largest oil producer, is also the producer to suffer the biggest decline in production, according to industry data from the Russian Energy Ministry.

As of mid-May, Russia's oil production was 830,000 bpd lower than it was in February. Rosneft-the top producer and the top refiner in Russia-accounted for 560,000 bpd of this drop, according to the ministry's data, as cited by Bloomberg.

This means that Russia's current production is below 10 million bpd, at around 9.16 million bpd, according to the Bloomberg calculations, and more than 1 million bpd below its quota under the OPEC+ production recovery agreement.

By Irina Slav for Oilprice.com

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