Wed, 29 Mar 2023

Output will slow as Moscow reroutes EU-bound flows to other markets, the official said

Russia projects a decline in its oil and gas output this year compared to 2022, partly due to the announced production cut, Energy Minister Nikolai Shulginov said on Wednesday.

In February, Russia announced it would voluntarily reduce oil production in March by 500,000 barrels per day in response to Western sanctions as it halted sales to buyers complying with an imposed price cap. Moscow said the move was designed to restore market relations shattered by the scheme, which it branded "illegal."

Addressing the Russian Parliament, Shulginov said that for 2023 he expected "oil production levels to be slightly lower, because of the voluntary reduction in output." The minister added that "gas production volumes will continue to decline, both due to the abandonment of the European market and the timing of the rerouting of energy flows to the East."

Russia's decision to reduce its oil production this month will help balance the global oil market, which is in a surplus now, Alexander Dyukov, the chief executive of Russian oil company Gazprom Neft, a subsidiary of Gazprom, said last month.

Oil production in Russia rose to 535.1 million tons last year from 524.5 million tons in 2021. Gas production dropped to 674 billion cubic meters (bcm) in 2022 compared to 763 bcm in the previous year.

In January Russia's oil exports surged to an all-time high previously reached in February 2020 despite the Western embargo on Moscow's seaborne crude as customers were rushing to boost their stocks of the commodity, a report by the International Energy Agency showed.

Meanwhile, other major oil producers like Saudi Arabia and Algeria have warned that Western sanctions such as the price cap on Russian oil will spark uncertainty and disrupt global trade flows.

For more stories on economy & finance visit RT's business section

(RT.com)

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