Novak: Russia’s oil production potential is much higher than the volume expected in 2023

The slight decrease in Russian oil production in 2023 is due to the obligations assumed within the framework of OPEC+ to balance the market. The country’s production potential is much higher, said Russian Deputy Prime Minister Alexander Novak, who oversees the fuel and energy complex, at Russian Energy Week.

“This year we will produce 527 (million tons of oil). This reduction of 8 million tons, insignificant, approximately 1.5%, is associated only with our interaction within OPEC+ to balance the market. In principle, we have much greater potential,” he said.

The Deputy Prime Minister emphasized that the departure of foreign suppliers did not affect the country’s oil and gas complex, since Russia was able to reduce the level of import dependence over several years from 60% to 30%.

On September 5, Russia announced that the reduction in oil exports by 300,000 barrels per day would be extended until the end of 2023. Novak explained then that the reduction volumes would be adjusted monthly “depending on the situation on the global oil market.” From March of this year until the end of 2024, the Russian Federation is also voluntarily reducing oil production by 500,000 barrels per day. In addition, in August Russia decided to reduce exports by 500,000 barrels per day, in September – by 300,000 barrels. This reduction does not apply to agreements under the OPEC+ deal.

Eight more OPEC+ countries also joined the voluntary reduction in oil production, including Russia’s main partner Saudi Arabia. The Kingdom reduced oil production by 500,000 barrels per day from May 1, and by another 1 million barrels from July until the end of the year.

On October 12, the International Energy Agency (IEA) reported that Russia increased oil export revenues in September increased by $1.8 billion to $18.8 billion, a record high since July last year. Total oil exports increased by 460,000 bbl/d after falling by 150 bbl/d in August to 7.6 million bbl/d.

How wrote Earlier, Vedomosti reported that the government raised the forecast export price of Urals oil for the next three years. According to the explanatory note to the draft federal budget for the next three years, the average export price for Russian oil in 2023 will be $63.4/barrel. The price forecast for 2024 has been increased by 6% compared to the parameters of the current federal budget for 2023–2025. to $71.3/barrel, for 2025 the price increased by 8% to $70.1/barrel. In 2026, the government expects the Urals price to be $70/bbl.