Russian Oil Companies in February 2023 Increased Production by Almost 1% Compared to the Average Level in January
In the first week of February 2023, Russian oil companies increased crude oil production by 0.7% compared to the January average, to 1,491 t/d.
Kommersant reported this on February 9, 2023.
In February 2022, oil companies in Russia produced an average of 1.508 million tons per day.
Thus, the volume of production in Russia has approached the level that was before the start of the Russian special operation in Ukraine and Western restrictions.
The most rapid production growth is observed at the Sakhalin-1 project, which by June, according to the estimates of one of the shareholders of the Indian ONGC project, should increase production by more than 20% compared to the current level – from 163 thousand barrels per day to 200 thousand barrels per day. bbl/day
The head of Rosneft I. Sechin, as part of India Energy Week 2023 on February 6, 2023, announced that the company is raising production, but has not yet reached the planned production volumes at the Sakhalin-1 project.
Recall that due to the US embargo and the voluntary refusal of many large traders to work with Russian oil, oil production in Russia in March-April 2022 decreased by 1.2 million barrels per day.
But then production began to recover, reaching 9.99 million barrels per day in October 2022 and remaining at this level until the end of the year, despite the EU embargo that came into force on December 5, 2022 and the ceiling on prices for Russian oil supplied by sea.
Deputy Prime Minister of the Russian Federation A. Novak previously reported that in January 2023, oil production in Russia remained at the level of December – 9.8-9.9 million barrels per day, with the same volume of production in February.
On February 5, 2023, the EU embargo and price ceiling for Russian oil products came into force.
The price ceiling is set at $45/bbl. for oil products sold at a discount to oil, and $100/bbl. for premium Russian oil products (the price ceiling is set at $60/bbl and has not yet been reviewed).
A. Novak noted that while the significant impact of this measure on oil refining in Russia is not noticeable, the volumes for February have been placed.
On February 7, 2023, the EC issued a clarification regarding the price ceiling for Russian oil products, stating that those oil products that are substantially processed in a third country or were produced in a third country by mixing Russian and foreign oil do not fall under the price ceiling for Russian oil products.
A. Novak assured that the authorities would monitor the situation with the export of petroleum products.
The Ministry of Energy of the Russian Federation does not yet see any grounds for a sharp reduction in the volume of oil refining in Russia.
According to S. Kondratiev from the Institute of Energy and Finance, Russian oil refineries (refineries) keep processing at a high level due to stable demand in the domestic market and the redirection of oil product supplies to the Middle East and Asia.
Future prospects are ambiguous, in the coming months Russia may face a scenario in which refining volumes will decrease.
At the same time, diesel refineries can at least maintain the current volume of fuel output, since the current crack spread (the difference between the price of oil and the basket of petroleum products received) allows many export refineries to feel quite well.
Logistics and the search for new partners in local markets remain the key risk, however, in February-March 2023, the decline in refinery output is likely to be less than previously expected and will not exceed 0.1-0.15 million barrels per day.
