Russia’s oil output may decline next year due to a global reduction pact, Energy Minister Alexander Novak said on Dec. 18, possibly halting an uninterrupted decade-long run of growth.
OPEC and other large oil producers led by Russia agreed this month to resume cutting output as oil prices have plunged to less than $60 from more than $80 per barrel in October in a blow to many oil producing countries’ coffers.
Russia has pledged to cut its production by 228,000 barrels per day (bbl/d) from a record-high monthly average of 11.41 million bbl/d.
Novak said this reduction will be achieved during the first quarter as production has exceeded 11.42 million bbl/d in December so far.
Novak, speaking at a committee of the ruling United Russia party at the lower house of parliament, said Russian oil production is set to rise this year by around 200,000 bbl/d to 556 million tonnes.
Russia’s oil production has been on an uninterrupted upward trend, thanks to new oil fields coming onstream, after 2008 when it declined amid a world-wide financial crisis and plunging oil prices.
Novak said that the base case scenario for production next year is 555-556 million tonnes.
“This could be adjusted, taking into account the reduction (deal), I think by 3-4 million tonnes to the downside. But a lot will depend on what further action we will take,” he told reporters.
“It is hard to give a precise forecast; there are lots of uncertainties today.”
Global oil prices have shed more than 30% since early October due to swelling global inventories and slowing global economic growth.
Novak said this month’s deal has prevented a deeper decline in prices.
“We are seeing the effect [from the deal] now. The prices did not fall to a very low level, which they could have reached had it not been for the deal,” Novak said.
Hurricane Energy’s FPSO vessel has been connected to the group’s North Sea Lancaster oil field on March 19, another milestone for the group as it seeks to extract so-called fractured basement oil in Britain.
U.S. oil producers sought on Jan. 23 to soothe OPEC's worries about losing market share, telling the group that investors in the U.S. firms wanted a reduction in growth and higher payouts.
U.S. crude oil production rose 231,000 barrels per day (bbl/d), or 2%, to a record 10.674 million barrels per day (MMbbl/d) in June, the U.S. Energy Information Administration said in a pair of monthly reports on Aug. 31.