Russian authorities anticipate that Russia’s oil and natural gas production will decline this year despite the fact that they claim to have replaced crude exports damaged by Western sanctions with new routes to South America, Asia, Africa and the Middle East.
Russian Energy Minister Nikolay Shulginov stated at an annual energy conference in Moscow that Russia’s efforts to sign new contracts with “friendly” countries have allowed its oil producers to “prevent the decline in sales volumes,” according to Ria Novosti, a state news agency.
Russia uses the term “friendly” states to refer nations that don’t participate in international sanctions against Russia or the European oil embargo. These restrictions were imposed by G7, a group of major economies, following Russia’s invasion Ukraine last year.
Shulginov identified India and China as the two biggest buyers of Russian crude oil last year. India received 22 times more Russian crude than it did in 2021.
He did not mention the effect of the Russian oil production cuts of 500,000 barrels per hour, which he repeatedly promised.
Russian Deputy Prime Minister Alexander Novak stated Monday that the reduction would last from 1 March through 30 June and that Russia is closing in on its target.
After the government had not classified any regular updates last year, no official figures for oil and gas production are available. However, market data service Statista has estimated that Russian crude oil output was 9.8 million barrels per daily in February. This is approximately the same as the previous month.
Moscow’s business newspaper Vedomosti reported Tuesday that Russia’s gas production fell nearly 10% to just under 119 billion cubic meters in February and January compared to the same period in 2022.
Mikhail Krutikhin is a partner in Moscow-based energy consultancy RusEnergy. He stated that although Russian oil producers are able to find new customers in distant countries, they have lost nearly all flexibility in gaining buyers from enough locations to get a better price.
Krutikhin suggested that India and China may be able to gain more leverage against Russia due to their vital support of the country’s oil sector.
Novak has complained repeatedly about the double-digit discount on Russia’s Urals Blend crude oil — the country’s most popular oil export blend — that new customers have demanded in order to offset higher shipping and insurance prices.
Novak expressed optimism that the Urals discount might decrease in time as freight prices decline.
According to Reuters, Spain tightened ship-to-ship transfer procedures earlier in the week. These are used to move Russian oil cargoes from smaller vessels into larger tankers destined to locations in Asia or Africa.
Oil tankers owners who wish to transfer oil offshore to Spain’s Atlantic and Mediterranean coasts will need to obtain authorization from the nearest Spanish port.
After Spanish authorities intercepted oil tankers suspected to have spilled crude oil into the Mediterranean Sea off Barcelona and the Canary Islands during ship–to-ship transfers, the new rules will be in force by mid-April.