Russia pours billions into developing new oil reserves
Part of the world’s largest oil-producing nations have recently made public plans to increase their production capacity. The reason for it is that peak oil demand is looming, and countries decided to make the most of their oil resources while they can.
According to the head of the energy committee at the Duma, the Russian parliament, everything that can be produced should be produced while there is still demand to sell it.
Russia is one of the three biggest oil exporters globally, alongside Saudi Arabia and the United States. Russia has enough oil to keep producing at current rates at least until 2080, with enough gas reserves to last for another 103 years. Notably, the state is pouring billions into developing new oil reserves in eastern Siberia to tap 100 million tons of new crude annually.
According to the country’s Energy Ministry, Russia does not have plans to considerably increase current production rates. In the last pre-corona year, the daily production rate was 11.3 million BPD, a record high. The Energy Ministry sees the current production rate increasing from 10.3 million BPD to 11.1 million BPD by 2029 before beginning to sink. It means that the country has eight years to take advantage of rising global oil demand.
OPEC+ started easing the production cuts by 350,000 BPD this month
Remarkably, OPEC’s oil exports have increased by 1 million barrels per day so far in May. Meanwhile, the OPEC+ group began easing the production cuts by 350,000 BPD in May.
At the ministerial meeting in early April, the OPEC+ group decided to gradually return more than 1 million BPD to the market between May and July. The OPEC+ collective oil production is set to increase by 350,000 BPD in May and June and by over 400,000 BPD in July.
Meanwhile, Saudi Arabia will also gradually ease its extra unilateral cut of 1 million BPD over the next few months, beginning with monthly production increases of 250,000 BPD in both May and June. OPEC+ is anticipated to return to the market as much as 2.1 million BPD by July.
Moreover, the decision from April indicated the confidence of the leaders of the OPEC+ that the market would be able to absorb that much supply as vaccination programs are quickening and individuals start traveling more.
OPEC+ and all analysts anticipate global oil demand to recover strongly in the second half of 2021 and nearly hit pre-crisis levels by the end of the fourth quarter in 2021.
