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The Russian government has given approval to a plan which would prepare a restoration of oil output for the resource-rich country once the current production limits approved by OPEC+ expire in 2022.
According to the office of the First Deputy Prime Minister Andrey Belousov, a government commission has agreed to support proposals first put forward by the energy and finance ministries which would help oil producers establish a fund of “unfinished oil wells”.
It is hoped that “the measure will stimulate oil companies to invest funds into further development of fields”.
The announcement comes in a likely attempt to balance the narrative within Russia as to the nation’s energy strategy in the years ahead. On Tuesday, the same day that the commission met, Russian Energy Minister Alexander Novak met with the representatives of a number of Russian oil companies to discuss the implementation of the OPEC+ cuts.
It has also been reported that Novak discussed the possibility of extending the current 2.5 million barrels per day (bpd) restrictions beyond June.
The wells referred to by the commission will be drilled in 2020-2021 but will stay idle until April 2022 when the OPEC+ deal agreed following the Saudi-Russian price war comes to an end.
To thus announce plans for greater drilling activity in the medium- and long-term will provide light at the end of the tunnel, should the Russian government decide to extend the current restrictions, which are the lowest for more than a decade.
By late-morning trading, Brent Crude stands down 1.58 per cent at $35.60 per barrel, while WTI Crude has fallen 1.22 per cent to $33.93.
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