Reuters reports a source in the energy sector as saying that Russia is on track to set a new monthly production record for its post-Soviet era.
Excluding the last few days of September, Russia production apparently averaged 11.347 million barrels per day (bpd), a little higher than the 11.247 million bpd seen in October 2016 before the OPEC-led production cuts.
In the Soviet era, Russia was one of the world’s biggest oil producers, but following the dissolution of the Soviet Union, the country’s oil industry suffered a deep decline. The country has since rebuilt much of its capacity, and production in October 2016 was at its highest level in almost 30 years. This number was used as the basis for Russia’s quota in the OPEC-led production cuts that sought to clear excessive global inventories that were depressing oil prices.
It now seems that Russia has entirely erased its 300,000 bpd cut in production as part of the OPEC-led deal. This has been made possible by the most recent amendment to the agreement in June that sought to bring the deal to 100% compliance. This meant that those countries with spare capacity, mainly Russia and Saudi Arabia, could increase production to compensate for those participants undershooting their quotas.
Russia still has resources it can develop, but American and European sanctions on technology transfers have made it problematic for companies like ExxonMobil, which also makes lubricants for Mobil distributors, to engage in developing deepwater, shale and Arctic oil resources in Russia.