Russia may be nearing the limit of its oil production capacity, according to recent media reports.
Bloomberg reported that the country's December oil and condensate output together totaled 10.903 million bpd, which was flat on November, suggesting it was using up all its available production capacity.
The report notes it assumes a flat production of condensates, which are included in Russia's total oil output, which would mean that crude oil output alone was 37,000 bpd below Russia's OPEC+ quota for December.
At the same time, Reuters reported that analysts expected Russia to fall short of its target of returning to pre-pandemic levels of oil production by May this year. Yet the analysts added the country could boost its spare capacity and production alike later in the year.
"It's possible that Russia will be behind the output increase schedule in the first half of 2022 and not reach its pre-crisis level until the end of summer," the report quoted Dmitry Manchenko from Fitch Ratings as saying.
Yet Russia has production boost plans for the year. Deputy Prime Minister and top OEPC+ negotiator Alexander Novak said last month, as quoted by Argus, that plans were to boost oil and condensate output this year by 3 to 5 percent.
This would mean a daily average of between 10.8 and 11 million bpd, Argus reported, up from an average of 10.5 million bpd last year. The report noted that Russia had exceeded its OPEC+ production quota every month of 2021 until November.
The Bloomberg report noted that most of Russia's production growth so far this year has been from reopened wells that were shut down last year amid the pandemic demand crunch. Now, it's down to new drilling to add more barrels, according to officials from Lukoil and Gazprom Neft. The latter, by the way, expects strong growth in production and revenues this year.
By Irina Slav for Oilprice.com
More Top Reads From Oilprice.com:
- How Biden’s Energy Agenda Could Send Oil To $100
- Oil Perks Up With Another Crude Inventory Draw
- Global Oil Demand Could Reach New Heights In 2022