Russian oil companies to restore its oil production levels
Russia has told its oil companies that they can restore crude oil production to 2016 levels, the country’s third largest producer, Gazprom Neft, said Tuesday in a briefing in London. Under an agreement with Opec and other producers, Russia had committed to cutting its production by 300,000 barrels per day (Bpd) until December 2018. The overall target was to reduce production by 1.8 million barrels per day (Mmbpd), but given supply disruptions in major producers such as Iran, Libya and Venezuela, Moscow and Riyadh have agreed to lift their output in order to balance the supply and demand.
Yakovlev said Gazprom Neft, producing 15% of the Russian oil, has felt the hit of the production cuts agreed to by the government in late 2016. Producers in the country were told to cut output in equal proportion, and Gazprom Neft shut in wells in Western Siberia and downscaled investment in drilling programs to comply with the cuts, Kallanish Energy reports.
It’s not clear whether the Opec and non-Opec deal has been unofficially scrapped, but both Russia and Saudi Arabia have publicly said they would add 1 Mmbpd of supply to the markets.
The company could add another 20,000 to 30,000 Bpd production this year, and another 50,000 Bpd next year.