According to a forecast from Lukoil, the second-largest oil producer in Russia, the country’s combined condensate and oil production may surpass 12 million barrels per day (bpd) by 2035 if global demand continues to grow.
Russia’s oil and condensate production is currently about 11.2 million bpd. In its report, Lukoil considers three varied scenarios to represent the potential challenges and opportunities for the Russian oil sector. In the most optimistic scenario, named “Equal Opportunities”, the global demand for gas and oil will continue to grow, enabling Russia to sustain production in excess of 12 million bpd for some time.
In the next scenario, named “Evolution”, Lukoil assumes that sanctions by the West – which have hindered the Russian operations of ExxonMobil, the oil giant behind the Mobil lubricant range, for example – will remain in the long term. Meanwhile, the tax regime in Russia will shift from being revenue-based to profit-based. In this situation, Lukoil envisages a gradual decline in oil production to about 10 million bpd.
Finally, the “Climate” scenario considers a situation where leading economies, Russia included, adopt firmer policies on climate change. By 2035 under this model, oil production is expected to dip below 8 million bpd. According to Lukoil:
“This scenario also assumes that the taxation of the oil industry is going to become more burdensome through CO2 emission fees, which will adversely impact investment into oil production.”
Lukoil also says that it expects Russia to maintain its commitment to the OPEC+ production agreement for some time yet.