Russia one step closer to reaching pre-pandemic oil output
Russia increased its annual oil output by more than 2% in 2021 amid a gradual easing of production cuts by the Organization of the Petroleum Exporting Countries and allies group (OPEC+), official data shows.
According to Interfax news agency, citing data from the country’s energy ministry, Russian oil and gas condensate production rose to 10.52 million barrels per day (bpd) in 2021 from 10.27 million bpd in 2020.
However, last year’s output was still short of the 11.25 million bpd recorded in 2019, before the Covid-19 pandemic.
In April 2020, Russia voluntarily cut its oil production by nearly a fifth – over 2 million bpd – in a coordinated push with OPEC+ to deal with market oversupply brought about by the pandemic. In August 2021 the group agreed to ease output curbs, allowing members to boost their monthly output by 400,000 bpd.
Last month, Deputy Prime Minister Alexander Novak said Russian oil output was expected to rise further to between 10.8 and 11.2 million bpd in 2022, restoring it to pre-pandemic levels by May. The timeline has been met with criticism from industry analysts, however. They cite a lack of spare production capacity, which could postpone these plans until later in 2022.
“It's possible that Russia will be behind the output increase schedule in the first half of 2022 and not reach its pre-crisis level until the end of summer,” Dmitry Marinchenko from Fitch Ratings said, as cited by Reuters.
According to sources at Russian oil extracting companies, efforts to raise oil production have been stalled by a lack of new wells, a slump in well production rates at hard-to-recover fields, and aging oil shafts in Russia’s Siberia. Similar problems have been reported in other OPEC+ oil-producing countries, too, and many say they stem from a lack of investment in the oil industry amid a global push for greener energy.
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