Reuters reports sources claiming that Russia is set to ask for changes in how its oil production is measured as part of the OPEC-led production curbs that began in 2017.
The problem arises because Russia includes in its figures a high-premium lighter form of crude oil, known as condensate, that usually results from production natural gas. This has not been a large problem in recent years for Moscow because its condensate production was relatively low. Russia is about to launch a new gas pipeline to connect it with China and open new fields in East Siberia and the Arctic to feed it, however. While the main aim is to produce and supply gas, condensate is an inevitable byproduct of gas production.
Reuters reports one source explaining:
“It is difficult to achieve higher output of gas without increasing output of condensate. So essentially, condensate is coming from our gas, not from our oil industry. If you try to reduce condensate production while boosting gas output, it badly affects the fields’ profile.”
Russia is reportedly keen to maintain compliance with the OPEC-led production curbs. The deal is credited with restoring some stability to the oil markets despite rising US production by operators like BP, the oil giant behind lubricant maker Castrol. Russia is currently overproducing by some 70,000 barrels per day (bpd), but this could be easily offset if its 770,000 bpd of condensate production, which has risen by 4% this year, is excluded from its oil production output.
