Russia, the world’s second biggest oil producer, has found it tough to raise output swiftly this year after cutting back by a fifth in mid-2020 during a pandemic-driven collapse in demand, showing that Moscow is a long way from becoming a swing producer.
Saudi Arabia has often been cast in the swing producer role with an ability to turn its oil taps off and on again in response to market price moves. Saudi Arabia, the world’s biggest oil exporter, for example, this year has made a voluntary oil output cut of 1 million barrels per day (MMbbl/d).
Russia was allowed by OPEC and its allies, known as OPEC+, to increase oil production by 65,000 bbl/d in February. But the country’s output of oil and gas condensate actually fell to 10.1 MMbbl/d from 10.16 MMbbl/d the previous month.
Resuming production quickly was trickier than expected as mature wells, mostly in Siberia, struggled to raise output and winter weather was only partly to blame.
“Russia is unable to change production as significantly and quickly as Saudi Arabia,” said Alexei Kokin from Moscow-based UralSib brokerage.
“That’s Russia’s industry hallmark: the large number of wells, which is not so easy to stop and launch.”
Russia would have soon recovered 890,000 bbl/d, or 45% from the deepest point of production cuts in May-June 2020, Deputy Prime Minister Alexander Novak said during a government meeting chaired by President Vladimir Putin on March 10.
“That means we will have practically restored half of production already in April,” Novak said.
Based on this month’s deal of the OPEC+ group, Russia is allowed to increase its output by 130,000 bbl/d in April.
In March, Russia has been able to get back on the recovery path, raising its oil and gas condensate output to 10.17 MMbbl/d from March 1-10, two sources familiar with the data said.
As of March 10, oil output was above 10.20 MMbbl/d, one of the sources said, suggesting that output would rise further.
Dmitry Marinchenko, a senior director at credit ratings agency Fitch, said that it was too early to call Russia a swing producer.
“Russia’s capability to quickly raise output above the pre-pandemic levels are limited,” he said, adding that the Middle East producers would carry the burden to restore the balance on the oil market thanks to available spare production capacity.
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