Russia’s annual oil production drops for the first time since 2008 following the OPEC + deal, pandemic

MOSCOW (Reuters) – Oil production in Russia fell last year for the first time since 2008 and hit its lowest level since 2011 following a global deal to cut production and sluggish demand caused by the coronavirus, statistics showed on Saturday.

Russian oil and gas condensate production fell to 10.27 million barrels per day (b / d) last year, according to Energy Ministry data cited by the Interfax news agency.

In tonnes, oil and gas condensate production fell to 512.68 million in 2020, from a post-Soviet record of 560.2 million, or 11.25 million b / d, in 2019.

The sharp drop was almost in line with expectations.

The reading of 512.68 million tonnes for 2020 was the lowest since 511.43 million tonnes in 2011, and the first annualized decline since 2008 amid the global financial crisis and falling oil prices.

Russia agreed to cut its oil production in April last year by more than 2 million barrels a day, an unprecedented voluntary reduction, alongside other major oil producers and the Organization of the Exporting Countries of petroleum (OPEC).

This decision was aimed at strengthening the oil market beset by the fallout from the COVID-19 pandemic.

Since the April agreement, a record reduction in world supply, the OPEC + group has gradually reduced the reductions and should release an additional 500,000 bpd on the market in January.

OPEC + is due to hold its next summit on Monday January 4. Russia is expected to increase its oil production by 125,000 bpd from the new year.

Russian Deputy Prime Minister Alexander Novak, in charge of Moscow’s relations with OPEC +, said Russia would support a gradual increase in the group’s production by an additional 500,000 bpd from February.

Darya Kozlova, analyst at VYGON Consulting, a Moscow think tank that advises the government, said the market was in better shape now than it was in March or April, when demand for oil fell sharply at most. strong from the first wave of the pandemic.

“There is a deficit of about 3 million barrels per day in the market because of the actions of OPEC +,” she said.

“Vaccination (against COVID-19) has started in many countries. So we’ll likely see an additional 500,000 bpd (agreed) tactical increase in January. Future actions will depend on the market situation. “