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Russia’s main oil-producing region of Khanty-Mansiisk (Yugra) in West Siberia significantly ramped up oil well drilling in the month of March, Reuters has reported. The region--which accounts for 40% of Russia’s oil production--launched 402 new wells last month, up 34% from February and higher than the monthly average of 365 new wells drilled in 2022. Last year, the region was responsible for 223 million tonnes of oil and gas condensate (4.5 MMbbl/d) out of Russia's total 535 million tonnes.
There are growing fears that Russian oil output might not have fallen despite government announcements. There are reports that Russian crude shipments remain strong despite sanctions and embargoes: Reuters reported April oil loadings from Russia's western ports are on track to reach their highest since 2019 at more than 2.4M bbl/day. Previously, Russia's Deputy Prime Minister Alexander Novak announced that Russia would cut production by 500,000 bpd in March, and again in early April promised to extend the cuts until the end of the year.
Russia’s Deputy Prime Minister Alexander Novak has also revealed plans for Russia to increase natural gas exports to China by almost 50 percent this year, from 15 to 22 million cubic meters.
Back in December, Russian President Vladimir Putin inaugurated the Kovykta natural gas field in eastern Siberia, located strategically to allow Russia to increase gas exports to China amid growing tensions between Moscow and the West. The inauguration was the culmination of efforts that began about a decade ago to develop new fields and build the Power of Siberia pipeline to deliver to the rapidly expanding market.
"We are launching the unique Kovykta gas field, the largest in eastern Siberia. Its recoverable reserves are 1.8 trillion cubic meters of gas," Putin said via video link during a televised ceremony.
The first Power of Siberia pipeline began to deliver gas from eastern Siberia to China at the end of 2019. It won’t be the last. Moscow has laid out plans to build a Power of Siberia 2 pipeline as Russia increasingly turns to the Middle Kingdom in the face of heavy western sanctions. China and India have become some of the biggest buyers of Russian oil and gas, with Bloomberg's oil strategist Julian Lee revealing that Russia's flagship Urals crude oil have been trading at a massive discount of more than per barrel $30, or about 40% to the international Brent crude oil, at the end of last week
By Alex Kimani for Oilprice.com
Alex Kimani is a veteran finance writer, investor, engineer and researcher for Safehaven.com.