BAKU, Azerbaijan, June 26. Russia's oil output in 2023 is estimated to decrease by only 290,000 b/d year-on-year, reaching 10.8 mb/d, Trend reports.
As the International Energy Agency (IEA) expected prior to the Russia-Ukraine war, the country's oil production level was projected to increase by 100,000 b/d, reaching 11.3 mb/d in 2025 before declining further. However, the agency's current supply forecast indicates a trend that is approximately 600,000 b/d below the pre-war estimate.
Furthermore, drilling activities are being intensified in the western Siberian oil hub. The agency's forecast for 2023-2024 also considers Moscow's self-imposed cut of 500,000 b/d, which extends from March until the end of 2024.
In 2022, Russia's total oil supply experienced a modest increase of 220,000 b/d, reaching 11.1 mb/d. Despite facing sanctions, Russian oil supply has remained resilient, as crude and product exports have been redirected to new markets with attractive price discounts, the agency noted.
Russia, the world's third-largest oil producer after the US and Saudi Arabia, acknowledges the challenge of finding new markets and the potential delay of upstream projects due to difficulties faced by domestic producers in securing equipment and financing. Western investors and lenders have largely withdrawn from the country. Considering all that, the IEA anticipates further easing of supply through 2028, with a net decrease of 710,000 b/d over the six-year forecast period. However, Moscow's ability to self-finance its oil industry operations and its access to Chinese equipment and services may mitigate a more severe decline. Nevertheless, an escalation of Western financial measures against Russia could lead to a sharper downward trend.
Russia's major oil producers had planned significant investment to enhance output, but these plans are now on hold. The country had been relying on its substantial Arctic resources to support production growth as its mature fields depleted. However, developing these hard-to-recover reserves will require substantial and costlier efforts compared to conventional fields.
At the same time, it remains uncertain whether Rosneft's Vostok Oil mega project, a crucial source of Arctic growth, will achieve its development targets. The project aimed to reach 600,000 b/d by 2024, but achieving this goal appears increasingly challenging in the medium term, despite Rosneft's assertion that the project remains on track and drilling has commenced at the Payakha field.