Russia has not increased its oil production as much as it has allowed its increased share under the OPEC + agreement in recent months. Estimates show that the leader of the non-OPEC group in the OPEC + pact has not made the most of the last two coalition agreements on raising members’ upper production limits. The quotas are proportional to the baselines, which means that the main producers, Saudi Arabia and Russia, get the largest increases in their respective oil production when OPEC + facilitates the cuts.
Although Saudi Arabia, OPEC’s main producer, strictly complies with its quota, it is estimated that Russia has fallen below the quota since April, the month in which OPEC + decided gradually increase collective oil production by 350,000 bpd each May and June and by more than 400,000 bpd in July.
Then, in July, the The OPEC + group decided it would start returning 400,000 bpd to the market every month from August until it is unaware of all the 5.8 million bpd cuts.
Russia, which pumps 105,000 bpd more each month, appears to be lagging behind other OPEC + members in producing quota, writes Bloomberg oil strategist Julian Lee in an opinion piece.
However, analysts speculate and try to calculate Russia’s crude oil production from the opaque data of its energy ministry.
The Russian Ministry of Energy reports each month on the total oil production figure for the previous month, without breaking it down between crude oil production and condensate production (a superlight oil). After years of discussions within the OPEC + group, Russia has obtained an exemption from not considering its condensate production as part of the production reduction agreement.
Related: Iraq secures new investment in its booming oil industry The lack of an official number of direct crude oil production makes it difficult to assess Russian crude oil production and compliance with the OPEC + agreement.
Every month is a guest the amount of crude oil that Russia pumps, and it is still a mystery whether it is really struggling to increase crude production or whether its condensate production has fallen this summer.
For example, in July, Russia saw its oil production go up for the first time in three months as OPEC + continued to alleviate production cuts and completed planned maintenance at some Russian oil fields. Russia’s crude oil and condensate production stood at around 10.46 million barrels per day (bpd) in July, 0.3% more than in June, according to Bloomberg calculates based on preliminary data from the Russian Ministry of Energy.
Russian oil production is estimated to have declined slightly in August, from 10.46 million bpd in July to 10.43 million bpd last month, according to Reuters calculates based on data from the Russian Ministry of Energy in tons reported in early September.
But these more than 10.4 million bpd include what is estimated to be 800,000 bpd-900,000 bpd in condensate production in Russia each month.
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Condensate production is likely to vary seasonally with natural gas production, Lee of Bloomberg notes.
If the gas giant Gazprom has produced lower volumes of condensate along with natural gas this year, as seems to be the case, this could mean that Russia’s crude oil production has risen in recent months, but has been masked by total production of lower condensate, according to Lee.
Russia’s oil production is expected to be 1% lower this year compared to 2020, in view of the OPEC + agreement, Energy Minister Nikolai Shulginov dit earlier this month.
Russia expects its crude oil plus condensate production to return to pre-pandemic levels in May 2022.
Then, and even later, analysts will continue to assess whether Russia is struggling to increase its crude oil production according to OPEC + quota quotas.
By Tsvetana Paraskova for Oilprice.com
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