Russia may have to pay a high price for the OPEC+ deal to reduce oil production which was concluded in the spring of 2020 after a price war with Saudi Arabia.
Russian oil companies have been facing problems trying to restore production volumes after the largest one-time decline in history, which removed every sixth barrel produced in Russia from the oil market. While OPEC countries are increasing production, and the total quota for the cartel is increased by 400,000 barrels per day every month, Russia is lagging behind other OPEC oil producing countries, producing less than the limit allotted to it.
According to the quota, Russian oil companies can supply 100,000 barrels per day every month (about 1% of current production). But in fact, in November, the growth was half as much – 0.49%, Bloomberg reports, citing data from the CDU TEK (Russian Federal state budgetary organization “Central Dispatching Department of Fuel Energy Complex”).
On November 12, Rosneft Vice President Eric Liron announced that Rosneft’s production capacity had been exhausted. And on November 24, Lukoil’s Vice President Pavel Zhdanov announced that his company had also exhausted potential for production growth. On November 19, Deputy Head of Gazprom Neft Alexei Yankevich said that the company will reach the limit of its production capacity by the end of the year.
Russian oil companies began experiencing problems in the summer, when OPEC+ approved a plan for a sharp increase in production, industry sources told Reuters.