Russia's government has ordered oil companies to lower their output in the second quarter so that the country can meet its OPEC+ production target of 9 million barrels per day (bpd) by the end of June. Previously, Russian Deputy Prime Minister Alexander Novak announced that Russia would cut oil output and exports by an extra 471,000 barrels per day (bpd) in the second quarter, in tandem with production cuts by other OPEC+ members. The country will then gradually ease the export cuts and focus on only reducing output. Although Novak is yet to provide the targeted level for output, Reuters has calculated that production would drop to almost 9 million bpd in June if the country proceeds with the planned production cut.
Private sources not authorized to speak publicly have told Reuters that Moscow has given specific targets to each oil company, an indication of its commitment to keep its OPEC+ pledge in a bid to support international oil prices.
Russian oil and gas condensate production fell from an annual peak of 11.7 million bpd in 2019 to around 10.8 million currently due to production cuts. The country has not disclosed production or export data ever since it started the war in Ukraine. Production has also suffered in the current year due to unplanned outages as well as drone attacks by Ukraine. Novak's statement did not include a six-month ban on Russian gasoline exports that kicked in from March 1. Russian crude oil and fuel trade has been under Western sanctions ever since Russia launched the Ukraine war two years ago, while the United States has imposed more sanctions on Russia's leading tanker group Sovcomflot.
Bloomberg has, however, reported that Russia is experiencing a drilling boom despite concerted efforts by the U.S. and its allies to limit technology transfer. The withdrawal of major Western oil-service companies from Russia has left their local subsidiaries to fill their void, which they have so far done successfully.
"Only some 15% of the nation's domestic drilling market depends on technologies from so-called unfriendly nations," Daria Melnik, vice-president for exploration and production at Rystad Energy, has revealed.
By Alex Kimani for Oilprice.com
Alex Kimani is a veteran finance writer, investor, engineer and researcher for Safehaven.com. More