Russia’s production of crude oil and condensate inched up to 11.28 million barrels per day (bpd) in January, up from 11.26 million bpd in December and the highest production level since August last year, data from the Russian energy ministry showed on Sunday.
According to energy ministry data, cited by Russian news agency Interfax, Russia slightly increased from December its oil and condensate production in January 2020, when deeper production cuts by OPEC and its Russia-led non-OPEC partners entered into force, at least for the first quarter of this year.
As per Reuters calculations of tons into barrels per day, total crude oil and condensate production rose in January, but no information has been released by Russia regarding what part of the January production was crude and how much was condensate.
Removing condensate from the level of compliance—a concession Russia won at the December OPEC+ meeting—makes Russia’s compliance record look more acceptable to OPEC’s leader and key partner in the deal, Saudi Arabia, which is pushing for all rogue producers in the pact to fall in line with their quotas.
The Russian energy ministry’s statistics do not break down yet crude oil and condensate production, but the ministry will regularly provide that breakdown to analysts, media, and OPEC, Russia’s Energy Minister Alexander Novak has said, according to Bloomberg.
Crude oil and condensate production in Russia hit a record high for the post-Soviet era in 2019, despite Moscow’s key role in supporting the ongoing OPEC+ production cuts. The new record oil production showed that one of the key parties to the OPEC+ deal, and certainly the key party in the non-OPEC camp of producers in the agreement, did not comply with its share of the cuts for most of 2019.
While Russia’s compliance with the deal in January 2020 remains a difficult task to calculate due to the condensate production, OPEC’s crude oil production in January dipped to more than a decade low, with Saudi Arabia and its Gulf Arab allies over-complying with the cuts, and Libya’s oil supply falling due to the ongoing port blockade, the monthly Reuters poll showed on Friday.
By Tsvetana Paraskova for Oilprice.com
ADVERTISEMENT
More Top Reads From Oilprice.com:
- Citi: Brent Oil Could Fall To $47 As Demand In China Crashes
- Coronavirus May Cripple Fuel Demand In All Of Asia
- OPEC+ Considers 500,000 Bpd Cut In Emergency Meeting
The concession amounts to an acknowledgement by OPEC that condensates are not crude and therefore can’t be sold as crude. Condensates are overwhelmingly used for blending with heavier crude oil grades. They are neither sold or used as crude nor are they suitable for refining. If this is the case, then this has huge implications for the calculation of US oil production.
The US Energy Information Administration (EIA) claimed that US oil production averaged 12.2 million barrels a day (mbd) in 2019. But according to the 2019 BP Statistical Review of World Energy, US condensate production amounted to 4.349 mbd. Deducting condensate production from US production gives a figure of 7.851 mbd, a far cry from the 12.2 mbd claimed by the EIA.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London