Russian oil production reached levels last month not seen since its Soviet days, according to new data released this week. Reuters reports on the record output:
The twin state energy giants Gazprom and Rosneft brought Russia’s oil output to a post-Soviet era record of 10.71 million barrels per day (bpd) in March, Energy Ministry data showed on Thursday. That topped December’s high of 10.67 million bpd. […]
Rosneft, the world’s largest listed oil producer by output, increased its crude oil production by 0.2 percent to 3.81 million bpd thanks to higher output from its Vankor field in eastern Siberia. […]
Russian officials say it is hard to significantly adjust output up or down due to the problems of mothballing wells in a harsh climate.
Russia’s fields are large, often located in harsh climates, and require enormous capital investments, which makes it difficult to cut production in the face of short-term price pressures, like the crash we’ve seen over the last eight months or so. That said, there’s also an obvious incentive for Moscow to pressure its state-owned oil firms to keep the crude flowing: it relies on the sales of these hydrocarbons to balance its budget.
But whatever the reason for this recent high-water mark, the fact is that one of the world’s largest oil producers is booming even as the market crashes on a supply glut. The upshot: don’t expect a price rebound anytime soon.