Russia On Course To Drill Record Number Of Oil Wells Despite Sanctions And Cuts

Russian oil producers accelerated the drilling of production wells in the first half of this year despite the Western sanctions and Moscow’s pledge to reduce output by the end of the year and cut exports in August, data seen by Bloomberg showed on Monday.

Russian exploration and production companies drilled more overall length of production wells in the first half of 2023 than in the same period last year and than the drilling target, the data showed. The total length of newly drilled wells rose by 8.6% year over year between January and June and was 6.6% more than the planned drilling activity.

Last year, Russian oil firms drilled the most wells in more than a decade, Bloomberg data showed earlier this year.

This year, the drilling could surpass last year’s post-Soviet high, according to analysts.

In 2022, we “saw a post-Soviet production-drilling record, and given the data I now expect a new high to be established,” Ronald Smith, an oil and gas analyst at Moscow-based BCS Global Markets, told Bloomberg.

The high drilling activity could be in preparation for more production capacity after the expiration of the OPEC+ cuts, or to simply maintain current production levels as oilfields age, analysts told Bloomberg.

So the accelerated drilling activity should not be interpreted as any sign of Russia’s compliance with its pledges to cut output by 500,000 barrels per day (bpd) this year and to cut August exports by 500,000 bpd.

Russia’s crude oil exports by sea continued to slump in the week to July 23 and are now well below the February levels and nearly 1.5 million bpd lower than the recent peak at the end of April, according to tanker-tracking data monitored by Bloomberg.

Russia’s crude shipments plunged by 311,000 bpd to 2.73 million bpd in the week to July 23, as exports out of the Western ports on the Baltic Sea and the Black Sea crashed to 1.17 million bpd, down by 625,000 bpd from the previous week, according to the data reported by Bloomberg’s Julian Lee.

By Tsvetana Paraskova for Oilprice.com

More Top Reads From Oilprice.com:

• Gasoline: The Price Rally That Nobody Saw Coming
• Oil Prices Rise As Focus Returns To Supply Tightness
• U.S. Drilling Dips Slightly Amid Rising Oil Prices