Russian contribution to OPEC supply cut was 300,000 b/d
Russia could boost its crude output to its highest rate in 30 years if OPEC and non-OPEC producers do not extend the OPEC supply cut pact beyond June 30, according a Reuters source familiar with Russian oil firms’ investment plans.
Despite strong compliance with the OPEC pact, the global crude inventories remain high. Saudi Arabia and Kuwait signalled last week that they would be prepared to continue the supply reduction pact to the end of 2017.
Russia, which was to cut 300,000 b/d to 10.947 million b/d, has not yet stated if it will sign on to an extension of the agreement.
According to a report by Reuters, Russian officials have indicated that local oil companies will boost output once the OPEC supply cut pact expires.
“According to investment programs of (Russian) companies, it is possible Russian oil production will increase once the deal expires,” Deputy Prime Minister Arkady Dvorkovich said. He added a number of firms were held back while the deal was in place.
“If there are no restrictions, they will decide not to hold back,” he said, speaking on the sidelines of an economic conference in the East Siberian city of Krasnoyarsk this weekend.
In March, Russian Energy Minister Alexander Novak told Reuters that output could reach 548-551 million tonnes a year in 2017, which is equivalent to 11.01 million to 11.07 million b/d, the largest average since 1987.
In 2016, Russia produced an average of 10.96 million b/d.
Without an extension to the OPEC deal, Raiffeisenbank analyst Andrey Polishchyuk said Russian output could increase by about 2 per cent in the second half of 2017 to about 11 million b/d.
“That’s because we have new oilfields,” he told Reuters.
Reuters reports Rosneft, Russia’s biggest oil producer, says it plans to increase output this year in newly acquired oilfields, including Kondaneft group of fields in Western Siberia. Between 2015 and 2017, the company had set a goal of 2 per cent output growth, which without any acquisitions would see the company produce 4.3 million b/d.
Lukoil, the second largest oil producer in Russia, predicts an increase in output if the OPEC supply cut deal is not extended and will be able to restore production to its pre-deal level in three to four months.
Tatneft says it could bump up its production by 10,000 b/d if the pact was not extended.
