Russia Produced 2% More Oil Last Year
But in 2023, oil production may fall by 7-8%.
Russia in 2022 increased oil production by 2%, to almost 535 million tons. Almost all major oil companies have increased production. Writes about this “Kommersant” (Dmitry Kozlov).
LUKOIL grew by 6% to 81 million tons. Surgutneftegaz, which became the third in terms of production and overtook Gazprom Neft, grew more rapidly. It increased production by more than 7% to 59.6 million tons. In fourth place is Gazprom Neft with an increase of almost 5%, to 59.1 million tons.
Of the four largest oil companies, only Rosneft reduced production, which, along with Gazprom Neft, fell under blocking EU sanctions, reducing production by 2%, to 178.5 million tons.
The independent oil and gas company of Eduard Khudainatov has increased production tenfold since 2020, to more than 20 million tons, mainly due to production assets that were acquired from Rosneft.
Experts expect a reduction in the production of raw materials in January-February due to the application by the EU and the US of a ceiling on prices for oil and oil products.
Russian oil companies in 2022 tried to adapt to EU and US sanctions. At the end of the year, oil exports to non-CIS countries via pipelines and the sea increased by almost 19%, to 207 million tons. At the same time, from December 5, the EU and the US introduced a ceiling on Russian oil prices of $60 per barrel, which, according to Russian Deputy Prime Minister Alexander Novak, could lead to a decrease in oil production in 2023 by 7-8%. Recall that the Russian authorities at the end of last year banned Russian oil companies from February 1, 2023 from selling oil under contracts that directly or indirectly contain the ceiling mechanism introduced by the US and the EU.
On February 5, the EU will also impose an embargo on Russian oil products. In 2022, the volume of Russian oil refining decreased by almost 4%, to 275 million tons.
Basically, the fall occurred in the spring of 2022, while then it was the additional loading of refineries that allowed oil companies to maintain production volumes, despite difficulties with exports. In the context of high oil prices, refining was stimulated by significant damper payments from the budget, which amounted to about 2.2 trillion rubles by the end of 2022. In February, the demand for oil from Russian refineries may be reduced by 2.8-3.2 million tons compared to January, Sergei Kondratiev from the Institute of Energy and Finance believes.
In 2023, alternative oil supply channels are likely to develop, but it will take time to build them, notes Maxim Malkov from Kept. He admits that a drawdown in oil production will be observed in January-February, but then production will be restored.
As a result of a decrease in production, wells with a high level of water cut can be withdrawn from circulation, the expert believes.
