Russia has announced an oil output reduction, but exports are at the peak: how is it possible

Alexey Gromov, Principal Director on Energy Studies of the Institute for Energy and Finance, commented to Forbes about disputes over the actual volumes of voluntary oil production cuts, which the Russian authorities announced at the end of February this year.

“Export figures are not unequivocal proof or refutation that Russia is cutting production or, conversely, not doing it,” Alexey Gromov said. “Russia traditionally reduces refining volumes in the spring, in March-May, because plants start scheduled preventive repairs.”

The scale of such a reduction is different, the expert says. Last year it was very large - then in April it was about 9% on an annualized basis. This was explained by the fact that Russia was in a state of uncertainty. This year, it is difficult to assess the seasonal decline due to the lack of objective data, he adds.

The second point, the expert notes, is the reduction in exports to Europe via the Druzhba oil pipeline. According to the results of this year, the reduction in the volume of supplies through Druzhba can be threefold, to 200,000-250,000 barrels per day compared to 650,000-700,000 barrels per day last year. Russia compensates for the decline in pipeline exports to Europe by increasing exports by sea.

Gromov agrees that in March, Russia did not achieve the planned targets for production cuts.

“According to the results of April, the statistics are still coming in, and I cannot say that we reached the desired figures at the end of April,” he says. - In principle, the situation may finally clear up by the end of May on the eve of the next meeting of ministers of the OPEC + countries (the next meeting of the Joint Ministerial Monitoring Committee is scheduled for June 4. - Forbes). Then maybe Russia will reach the 500,000 barrels per day production cuts.”