Russia is taking a leaf out of the U.S. shale playbook so it can ramp up oil production quickly and hang on to its share of the global market when demand finally recovers after the coronavirus pandemic.
FILE PHOTO: A view shows an oil derrick at Vankorskoye oil field owned by Rosneft company north of the Russian Siberian city of Krasnoyarsk March 25, 2015. REUTERS/Sergei Karpukhin
U.S. shale producers tend to drill but not complete wells when oil prices are low, rather than freezing all activity, so they can finish off the wells and quickly boost production when demand picks up. Russia pumped an average of 11.3 million from 180,000 wells last year, according to the energy ministry. Since the OPEC+ deal to curb global crude supplies, its output has fallen by 2 million bpd, Novak said last week.
Russia has outlined various stimulus measures to cope with the fallout from COVID-19 and spending over the next two years is expected to reach 5 trillion roubles. It was not clear if the planned support for oil companies would come from these funds.Saudi Arabia and the United States are able to resume halted oil production faster than Russia, analysts say, and Moscow is wary about losing out as and when the market returns to normal.
The level of investment announced by Moscow would be enough to drill about 3,000 production wells of varying types, according to Klubkov at Vygon, which does research for Russia’s energy and natural resources ministries. Anatoly Popov, deputy chairman of the executive board at Russia’s biggest lender Sberbank, told Reuters it was in talks with the energy ministry about the scheme and details had yet to be finalised.State development bank VEB confirmed to Reuters that it was involved in talks over its possible role in Moscow’s broader coronavirus stimulus package, without elaborating on details.
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