Russia is having trouble reversing an oil production decline it implemented under its agreement with OPEC+, Reuters writes, citing unnamed sources.
According to these sources, Russia has been producing some 10.42 million bpd of crude oil and condensates since the start of the month, which is lower than May's average of 10.45 million bpd.
The reason for the decline could be related to difficulties with boosting production at older fields, other sources, also unnamed, told Reuters.
There was talk about such difficulties as early as last year when OPEC+ first agreed to take some 7.7 million bpd off the market in response to the demand destruction caused by the pandemic.
"Mass sealing of oil wells is a much more serious thing than short-term idling" in the Russian climate conditions, according to oil industry executive Evgeny Kolesnik, who spoke to Bloomberg in May 2020. "It's by far not a given that after a well has remained shut-in for so long it will pump at the same levels as before."
Initially, the report noted, when Russia had joined OPEC members in their production control efforts, its oil companies cut a relatively small portion of production, slowly, and for a few months only. In 2020, these companies were asked to cut much deeper and much faster, as well as for much longer.
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With such long production suspension, there is the risk of never being able to restart some of the wells. The longer a well sits idle, the more likely pressure changes become, as well as water content changes capable of rendering the well unusable ever again.
OPEC+ is meeting later this week to discuss the next steps in its production control agreement. Early reports said the cartel was mulling over bringing additional supply online from August in response to the fast rebound in demand.
By Irina Slav for Oilprice.com
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