Russian oil companies need to reduce oil production by 300,000 barrels a day. The reduction in output will be distributed evenly, the Russian Ministry of Energy says. How ready are Russia’s oil companies to reduce output next year? That was one of the topics that the Analytical Center expert Alexander Kurdin talked about live on RBC-TV.
Serious Restructuring is Needed before Oil Production Cutdown
"The bulk of oil that is produced in our country comes from state owned companies; Rosneft alone produces more than 200 million tonnes, accounting for almost half the national output. It is clear that the state companies and primarily Rosneft will have to cut down their output," the expert explained.
At the same time Mr Kurdin does not see any big problems in reducing oil output. "I would not over-dramatize the situation," the analyst said. "If you look at oil production over the past few months, you will see that according to the Ministry of Energy we produced about 10.8 million barrels a day last year and early this year and now we produce over 11 million barrels a day." The International Energy Agency cites similar figures. "In other words, the output cut down by 300 thousand barrels a day is simply a pullback to the level of production registered in late 2015 and early 2016. So, there is nothing critical about this situation and the move should not be too painful," the expert is sure.
At the same time the process will be proceeding in stages, the analyst explained. "Reducing oil production in Russia means that we have a lot of deposits with completely different conditions so the capabilities to reduce the oil output also vary from one oil field to another," Mr. Kurdin said. There are fields that have very serious problems with infrastructure and a whole host of problems would have to be sorted out before production could be cut down on those fields. This means that some serious restructuring is needed as we begin to cut down the oil production.