IMG.gif

New Data Show Slump in Russian Oil Output

Copyright © 2022 Energy Intelligence Group All rights reserved. Unauthorized access or electronic forwarding, even for internal use, is prohibited.
exploration-production/rf33561386-exploration-production.jpg

Recent declines in Russia's oil production appear to be accelerating, according to data obtained by Energy Intelligence.

The new numbers show Russia's combined output of crude oil and condensate fell to an average of 10.365 million barrels per day during the first 10 days of April — a drop of more than 600,000 b/d versus the March average of 10.996 million b/d.

Furthermore, by Sunday, Apr. 10, the country's combined production of crude and condensate had sunk well below 10 million b/d to 9.816 million b/d — a loss of more than 1 million b/d versus the March average.

Energy Intelligence had previously reported that Russian data for the first three days of April showed output of 10.57 million b/d — more than 400,000 b/d below the March average.

Novak's Numbers Now Look Dated

Deputy Prime Minister Alexander Novak had said on Apr. 7 that Russia's oil production was set to fall by 4% to 5% in April, compared with March.

He attributed this to "changes in logistics" and "financial problems" as the result of an international backlash against Russia following its Feb. 24 invasion of Ukraine.

However, unless the recent trend is reversed very soon, Russia appears to be heading for a much steeper fall in its April oil production than Novak had indicated just a few days ago.

Russian production for March — the first full month after Moscow sent its troops into Ukraine — fell by only 65,000 b/d compared with February.

But the International Energy Agency warned last month that Russia could be forced to shut in 3 million b/d of production from April as a result of sanctions and voluntary decisions to shun its oil.

As some international buyers turn away from Russian oil, pipeline operator Transneft has been limiting the volume of oil it accepts into its system.

To avoid overwhelming transportation and storage capacity in its system, Transneft has been telling producers it will only accept barrels that have already been sold to a designated buyer.

Oil Storage Debate Revived

Meanwhile, Igor Shpurov, the head of Russia's Mineral Resources Agency, has recently suggested that the problems the country is currently facing with its oil exports reinforce the case for a major expansion of oil storage capacity.

Speaking at the Yamal Forum, he noted that Russia's gas industry is in a much stronger position these days since it has built storage capacity, which helps it to even out peaks and troughs in supply and demand.

Shpurov said storage capacity could be created in salt caverns located along the national oil pipeline system in the Urals, Volga and East Siberia regions.

He said Russia could create storage capacity for some 100 million metric tons (730 million barrels) of oil — broadly similar to the capacity of the US Strategic Petroleum Reserve (SPR).

However, he also acknowledged that it could take two to three years to implement such a plan.

The idea of creating a national storage system for crude oil and refined products has been discussed in Russia at various times over the last 20 years or so, but has never really made much progress.

Estimates of the country's current storage capacity vary considerably, but they are generally all much lower than the capacity of the US SPR.

Shpurov also told the Yamal Forum that "one of the big Russian companies" is already working on a storage project that could be completed next year. He was most likely alluding to state-controlled Rosneft, Russia's biggest producer.

Topics:
Oil Supply, Oil Demand, Oil Inventories, Sanctions, Ukraine Crisis
#
The number of active drilling rigs targeting oil in the US bounced back above 600 last week, according to Baker Hughes.
Fri, Aug 12, 2022
Opec-plus crude oil production surged by 1 million b/d in July, largely thanks to a recovery in the output of Kazakhstan, Nigeria, and Libya.
Thu, Aug 11, 2022