Russian oil workers were not ready to produce a lot of oil

Kommersant: Russian oil companies cannot increase production under OPEC +

Russian oil companies were not ready to produce a large amount of oil in accordance with the current terms of the OPEC + deal, Kommersant writes. The reason for this is inadequate investment in drilling new wells.

Several domestic oil companies spoke about the lack of production capacity in October and November. All of them are facing the consequences of insufficient funding to develop new wells in the face of production restrictions under the current OPEC + deal.

It was resumed in May 2020 after several weeks of hiatus due to the inability to agree on the terms of the extension. According to the initial agreements, the total reduction in production was 9.7 million barrels per day and should have gradually decreased. To date, it has dropped to four million barrels per day and will continue to decrease by 400 thousand barrels per day per month, so that in September 2022 the agreement will end altogether.

Initially, the participating countries calculated the level reductions and personal quotas based on the maximum possible “normal” production levels. As a result, for some of them, these levels were too high. For example, Russia set it at 11 million barrels per day, while Deputy Prime Minister Alexander Novak considers the figure of 10.5 million barrels per day to be more realistic.

During the agreement, many companies refused from investments in production. As a result, their current capacities are often unable to meet the permitted, constantly growing quotas. According to Vygon Consulting, the decline in production by the end of 2021 will be 5 percent.