RUSSIAN OIL INDUSTRY ON TRACK FOR 2023 OIL OUTPUT OF 9.6 MBPD IN LINE WITH CUTS

Mon 24 Apr 2023:

Russia’s oil output this year is on course to top 480 million tonnes, or about 9.6 million barrels per day (bpd), a Russian government source familiar with the data told Reuters.

The figure, which excludes gas condensate, is in line with Russia’s pledge to cut production by 500,000 bpd to 9.5 million bpd from March until year-end, according to Reuters calculations and the source.

“If you extrapolate for the whole year, production will be 480 million tonnes,” the source told Reuters on condition of anonymity due to the sensitivity of such data.

Russia’s Energy Ministry did not reply to a request for comment.

Oil and Condensate

In 2022, Russia’s combined oil and gas condensate production rose to 535 million tonnes (10.7 million bpd). Condensate is excluded from the production quotas used by the OPEC+ producers group for Russia.

Such production may reach around 520 million tonnes (10.4 million bpd) this year, according to the source, taking some 40 million tonnes of gas condensate into account.

That is significantly higher than official forecasts, which put Russia’s expected 2023 oil and gas condensate production at between 490 million and 500 million tonnes (9.8 million to 10 million bpd).

“Russia’s oil demand has largely stabilised after the initial shock at the start of the war,” J.P. Morgan analysts said in a research note this month. “We believe demand is almost back to pre-war levels.”

They estimated Russia’s aggregate production (crude and condensate) at 10.8 million bpd in March, down 250,000 bpd from February.

Cut to support prices

Russia’s oil production fell in April 2022 after the West imposed sanctions over what the Kremlin calls its military operation in Ukraine. However, since then, Russia has been successful at selling its oil to China and India.

Yet, in order to prop up the price of oil, the lifeblood of the Russian economy, Moscow has decided to cut its crude oil output by 500,000 bpd until the end of the year.

The world’s second largest oil exporter after Saudi Arabia, Russia has halted or delayed publishing some of its key energy data, including production and export information.

“The lack of transparent official data from one of the world’s top oil producers makes it more and more challenging to monitor global supply and analyse markets,” J.P. Morgan analysts said in the research note.