Page 107 - RusRPTFeb21

tonnes and $28.05bn, respectively. Next in the ranking was Iraq - last year it sold 60.11mn tonnes of oil to China for $19.17bn. The list included Brazil (42.18mn tonnes), Angola (41.78mn tonnes) and Oman (37.83mn tonnes). Just 36% of 30bn tonnes of Russia’s oil reserves are profitable, ​Deputy Energy Minister of Russia Pavel Sorokin wrote in his article for the Energy Policy magazine, ​TASS ​informed.
“According to data of fields’ development economics inventory completed on the instruction of the Russian government, just 36% out of 30bn tonnes of recoverable reserves of Russian oil are profitable in the current macroeconomic environment. This is related to worsening of development opportunities: growing water cut, the need to build costly wells of complex design, low permeability and compartmentalization of reservoirs, the move to marginal areas and beds with low thickness, and so on,” the official said.
“All that does not merely increase the lifting costs but also moves upward risks of failure to confirm target development figures because of the complexity of processes modeling and drilling errors, for example, leaving the pay bed in horizontal drilling. The result is the actual profitability of drilling may considerably differ from plans for certain assets and reserves will not be confirmed,” Sorokin said.
Oil prices fell to record lows in the spring of 2020 after a pandemic collapsed in oil demand but has since recovered to about $50 per barrel​. The price of Brent-grade began to stabilize at around $40 after Russia and OPEC countries agreed on measures to limit production in mid-April.
At that time, it was decided to cut production by almost 10mn. barrels per day in May and June and almost 8 mill. barrels per day in July-December 2020. According to the plan, oil production will be cut by almost 6mn barrels per day until the end of April 2022. Although the countries have complied reasonably well with the agreed production volumes, Saudi Arabia has also supported the price level with its own voluntary production restrictions.
At their meeting on January 4, the OPEC + countries held close discussions on the continuation of the restrictions, and finally an exceptional solution was reached. Russia was allowed to increase production by 65,000 barrels per day while OPEC countries adhere to previous production volumes. In addition, Saudi Arabia voluntarily announced that it would cut production by 1mn barrels a day. As a result, oil production is clearly shrinking, which has supported the price of oil.
Although the current price level is about double the level of last March, it is clearly lower than in 2017–2019. For the Russian state economy, the current price level is tolerable, and therefore Russia has emphasized increasing production in order to maintain market shares. The balance of public finances
107 ​RUSSIA Country Report​ February 2021 www.intellinews.com