Russia’s 2021 oil output up 2.4% on year on increased OPEC+ quotas. 2021 production averages 10.52 mil b/d. December output flat on month as spare capacity declines. Output was up 8.4% on December 2020 volumes of 42.54 million mt, or 10.06 million b/d. Russia’s December crude quota under the OPEC+ agreement was 10.018 million b/d, up from 9.914 million b/d in November. Russia plans further output growth in 2022, S&P Global Platts reports.
In 2021, Russian production totaled 524 million mt, according to data released by the Central Dispatching Unit of the Energy Ministry on Jan. 2. This was up on output of 512.78 million mt, equivalent to around 10.27 million b/d, in 2020, the CDU said previously. Russia expects oil production to continue to grow in 2022 and reach pre-pandemic volumes by May. Officials forecast overall production at between 540-550 million mt, or 10.84-11.05 million b/d, in 2022.
Russia’s daily average crude and condensate output rose by 2.4% on year to 10.52 million b/d in 2021, as OPEC+ increased quotas in line with recovering demand as pandemic lockdown measures eased globally. Analysts see quotas continuing to be the most influential factor affecting output in 2022. They forecast spare capacity and drilling programs, releases of strategic petroleum reserves, the coronavirus pandemic’s impact on demand, and potential new western sanctions on Russian energy producers as other factors likely to affect production, S&P said.
Outside Russia, OPEC and the International Energy Agency also forecast Russian oil production growth in 2022. OPEC estimates it will average 11.78 million b/d, and the IEA 11.66 million b/d next year.
The OPEC+ agreement does not cover condensate production. The Russian government does not provide breakdowns of crude and condensate output, but condensate usually accounts for around 8% of overall production. 2021 crude and condensate production included December output of 46.11 million mt, equivalent to 10.9 mil b/d, according to the CDU data. Daily average volumes were flat on November 2021, as Russian oil producers’ spare capacity declined, following steady increases to output quotas in 2021.
Russia’s overall oil exports totaled 214.40 million mt in 2021, equivalent to 4.3 million b/d. Daily average deliveries were down 2% on shipments of 4.39 million b/d in 2020. This included December exports of 19.24 million mt, or 4.55 million b/d. Daily average deliveries were up 1.3% on month, and 13% on year.
Russia’s domestic deliveries totaled 286.39 million mt, or 5.75 million b/d in 2021. This was up 5% on daily shipments of 5.47 million b/d in 2020. This included deliveries of 25.15 million mt, or 5.95 million b/d in December. This was up 1% on November 2021, and 8% on year.
Prices for Russia’s key Urals crude grade rose significantly in 2021 as demand recovered. Russian deputy prime minister and key OPEC+ negotiator Alexander Novak said Dec. 24 that he expects prices to be stable at around $75/b in 2022. Current prices are well above the conservative level included in Russia’s state budget for 2022 of $44.20/b. S&P Global Platts assessed Urals CIF Rotterdam at $75.53/b Dec. 31, up 54% from $48.92 on Jan. 1.
Russia’s weak December oil production signals lack of capacity. Russia failed to boost oil output last month despite a generous ramp-up quota in its OPEC+ agreement, indicating the country has deployed all of its current available production capacity, Bloomberg said. With OPEC+ meeting to consider output policy in the face of the fast-spreading omicron variant, Russia’s lack of growth highlights the limits of the group’s attempt to boost supply if demand continues to recover. Saudi Arabia, Iraq and the UAE can raise output, but others such as Angola, Nigeria and Kuwait are struggling to meet their quotas.
Russian companies pumped 46.11 million tons of crude oil and condensate last month, according to preliminary data from the Energy Ministry’s CDU-TEK unit. That equates to 10.903 million barrels a day — based on a 7.33 barrel-per-ton conversion rate — and is flat to November. Until recently, Russia ramped up production by restoring operations at wells that were shut-in or idled in spring 2020 as the pandemic shattered global demand. Now any further growth in output will mostly come from newly drilled wells, officials at Lukoil PJSC and Gazprom Neft PJSC said late last year.
It’s difficult to assess Russia’s compliance with the OPEC+ deal, as the CDU-TEK data don’t provide a breakdown between crude and condensate – which is excluded from the agreement. If condensate output was the same as in November – some 930,000 barrels a day – then daily crude-only production was around 9.973 million barrels, about 37,000 barrels below its December quota, Bloomberg reports.
Russian oil and gas condensate output rose to 10.52 million barrels per day (bpd) last year, according to energy ministry data cited by the Interfax news agency and Reuters calculations, from 10.27 million bpd in 2020. In tonnes, oil and gas condensate output increased to 524.05 million in 2021 from 512.68 million tonnes in 2020, but was still below a post-Soviet record-high of 560.2 million, or 11.25 million bpd, seen in 2019.
According to Interfax, Russian oil exports outside the former Soviet Union declined by 2.2% in 2021 to 214.4 million tonnes. It also said that Russian natural gas output jumped by 10% last year to 762.3 billion cubic metres.
In April 2020, Russia agreed to reduce its oil production by more than 2 million bpd, an unprecedented voluntary cut, along with other leading oil producers and the Organization of the Petroleum Exporting Countries (OPEC). Deputy Prime Minister Alexander Novak has said that country’s oil output is expected to rise further to 540-560 million tonnes (10.8-11.2 million bpd) in 2022, and to 542-562 million tonnes in 2023, Reuters reports.