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Russian Firms To Invest $22.5 Billion In Oil Production In 2018

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Russian companies are expected to invest US$22.5 billion (1.3 trillion rubles) in oil production this year, with crude output and exports forecast at the same levels as in 2017, Russia’s Energy Minister Alexander Novak said on Friday.

Russia’s vertically integrated oil companies invested US$23 billion (1.33 trillion rubles) in oil production in 2017, up by 10 percent compared to the 2016 investments of US$21 billion (1.21 trillion rubles), Novak said, as quoted by the TASS news agency.

“Last year we had a very large increase of 10%, so maintaining this level would be a good figure,” Novak noted.

Despite the OPEC/non-OPEC deal, Russia’s average daily crude oil production inched up again last year, to a 30-year-high of 10.98 million bpd. Russia’s pledge in the production cut deal is to shave off 300,000 bpd from the October 2016 level, which was the country’s highest monthly production in almost 30 years—11.247 million bpd.

Commenting on the deal in which Russia leads the non-OPEC producers part of the pact, Novak said today that all countries in the agreement are in favor of continuing some form of cooperation to bring the oil market back to balance.

“I did not hear from a single minister who was against such cooperation,” TASS quoted Novak as saying.

Related: Bahrain Says Giant Discovery Holds 80 Billion Barrels Of Oil

However, the Russian energy ministry has not received proposals to extend the current OPEC/non-OPEC deal in its existing form through the end of the first half of 2019, Novak noted.

Referring to OPEC and allies’ plans for after the current expiry date of the cuts at the end of 2018, Novak said that some kind of cooperation could be made “indefinite”.

“If we talk about the format, we can make an indefinite agreement,” Novak said.

Last month, Saudi Crown Prince Mohammed bin Salman said that Saudi Arabia and Russia were looking to solidify their cooperation on crude oil production for another decade or two.

By Tsvetana Paraskova for Oilprice.com

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  • Mamdouh G Salameh on April 07 2018 said:
    The fact that Russia will be investing $22.5 billion in enhancing its oil production in 2018 on top of $23 billion in 2017 speaks volumes about how ineffective US sanctions on Russia are. Moreover, it means that Russia is determined to remain the world’s top crude oil producer.

    Analysts at Oilprice.com keep questioning Russia’s commitment to the OPEC/non-OPEC production cut agreement by referring to Russian oil production reaching 10.98 million barrels a day (mbd) in March 2018. I keep saying that one should look at the average daily production in 2017 and also in January and February 2018 to judge as to whether Russia has been adhering to its promised production cut or not.

    Russia’s commitment to the OPEC deal is as strong as ever as has been repeatedly confirmed by the Russian oil minister and also by Saudi Crown Prince Mohammed bin Salman saying recently that Saudi Arabia and Russia were looking to solidify their cooperation on crude oil production for another decade or two.

    Dr Mamdouh G Salameh
    International Oil Economist
    Visiting Professor of Energy Economics at ESCP Europe Business School, London
  • kevin on April 07 2018 said:
    That is madness to invest in an industry that cannot keep stable

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