OPEC's crude oil production increased…
Crude prices will likely get…
Russia’s government approved on Tuesday a plan to have new oil wells drilled this year and next for 2022 production, the office of First Deputy Prime Minister Andrey Belousov said in a statement.
A Russian government commission backs the proposals of the energy and finance ministries to create a ‘fund of uncompleted wells’ with the oil firms with the purpose of supporting the oilfield services sector, the Russian government said.
The global oil demand drop and the subsequent decision to curtail production is reducing orders for the oil services sector in Russia, which employs more than 300,000 people, the government commission said. Under the new plan, oil producers in Russia, with the help of banks, will hire oilfield services companies to drill new oil wells in 2020 and 2021. Those new wells, however, will only begin pumping oil after Aril 2022, when the current OPEC+ deal expires.
The OPEC+ group pledged in April production restrictions of 9.7 million bpd in May and June, before easing the cuts to 7.7 million bpd for July through December, and then further to 5.8 million bpd until the end of April 2022.
As part of the agreement, Russia pledged to cut its production to 8.5 million bpd in May and June from a February 2020 baseline, or by around 2 million bpd, or by 19 percent, from February 2020, Russian Energy Minister Alexander Novak told Interfax in an interview last month.
According to reports from last week, Russia is almost complying with its share of the cuts, with its crude oil production averaging 8.72 million bpd in the first three weeks of May, as per Reuters estimates. This is close to the 8.5-million-bpd quota, especially considering Russia’s far-from-perfect track record in complying with the cuts.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.