Russian oil companies were not ready to produce large quantities of oil in accordance with the current terms of the OPEC + deal. writes Kommersant. The reason for this is insufficient investment in drilling new wells.
Several domestic oil companies spoke about the lack of production capacity in October and November. All of them face the consequences of insufficient funding for new well development in the face of production restrictions under the current OPEC + deal.
It was resumed in May 2020 after a few weeks of hiatus due to the inability to agree on the terms of the extension. According to the initial agreements, the total reduction in production was 9.7 million barrels per day and should have gradually decreased. To date, it has dropped to four million barrels per day and will continue to decrease by 400 thousand barrels per day per month, so that in September 2022 the agreement will be terminated altogether.
Initially, the participating countries calculated the reduction rate and personal quotas based on the maximum possible “normal” production levels. As a result, for some of them, these levels were too high. Thus, Russia has set it at 11 million barrels per day, while Deputy Prime Minister Alexander Novak considers the figure of 10.5 million barrels per day to be more realistic.
During the term of the agreement, many companies refused to invest in production. As a result, their current capacities are often unable to meet the permitted, constantly growing quotas. According to Vygon Consulting, the decline in production volumes by the end of 2021 will be five percent.
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