Kasatkin Consulting stressed that the slowdown in drilling rates could be influenced by a decrease in refinery utilization. It is expected that the total volume of production drilling in Russia will decrease to 29.4 thousand km this year.
Russian oil companies have reduced drilling rates compared to last year’s record amid increased production cuts under the OPEC+ agreement in order to stabilize the global oil market, according to industry data published by Bloomberg News. In total, the installations in Russia drilled 14.37 thousand km of production wells from January to June. This is 2.5% less than in the same period a year ago.
Russia is implementing two packages of measures to reduce OPEC+ production, which the group considers voluntary, since not all members of the alliance participate in them. The first reduction in production by 500 thousand barrels per day (bpd) was announced in early 2023. This was followed by a reduction of 471 thousand b/d in the period from June to September 2024.
Bloomberg writes that the production level in Russia is expected to reach 8.978 million bpd until October, when the country will begin to gradually lift restrictions in accordance with the OPEC+ deal.
RBC sent a request to the press service of the Ministry of Energy.
According to the latest monthly OPEC report based on secondary sources, in June, oil production in Russia amounted to 9.139 million barrels per day. Moscow plans to make additional cuts in October and November 2024, and then in the period from March to September 2025 — in total, Russia‘s compensatory “under-production” will amount to almost 15 million barrels of oil during the period, Bloomberg writes.
Dmitry Kasatkin, partner at Kasatkin Consulting, said that a decrease in the utilization of refineries could also affect the slowdown in drilling this year. It is expected that the total volume of production drilling in Russia in 2024 will decrease slightly to 29.4 thousand km, but still exceed the average that was achieved from 2019 to 2022. According to Kasatkin Consulting estimates, next year it will again exceed 30 thousand km.
Ronald Smith, oil and gas analyst at BCS Global Markets, explained that “the combined effect of increased drilling and a higher concentration of prospective drilling makes it very likely that, despite the sanctions–related operational difficulties, Russia maintained its oil production capacity at 10.5 million barrels before the conclusion of the OPEC+ agreement even though oil production has fallen to about 9 million b/d.“
In early June, OPEC+ extended the agreement on reducing oil production for the whole of 2025, before that the deal was calculated until the end of 2024. Previously, the permitted oil production level of all OPEC+ participants was 39.425 million barrels per day. From January 2025, this quota will increase by 300 thousand b/d due to the UAE, to 39.725 million b/d.
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