Russia’s production of crude and condensate in 2022 is expected to rise by 5% on the year to about 540 million-550 million mt, or up to 11.045 million b/d, deputy prime minister Alexander Novak said Dec. 24.
The country’s oil production is set to reach the pre-pandemic level by May next year, he previously said, as the OPEC+ alliance continues to increase output monthly to meet rising demand, says an article published in Platts.
OPEC+ alliance
In 2021, Russia’s production of crude and condensate will increase by 2.1% on the year to total 524 million mt, or 10.52 million b/d.
“We expect to reach the level from which we began to cut output by May, and our industry will produce 540 million-550 million mt next year,” Novak said in his annual interview to state broadcaster Rossiya 24.
The Russian government does not provide breakdowns of crude and condensate output, but condensate usually accounts for around 8% of production.
Novak expects global oil demand to fully recover to the pre-pandemic level by the end of 2022.
“Demand will continue to recover as it is growing in the world even though the pandemic has not gone anywhere and still comes in waves, but countries have learned to live with it,” he said.
S&P Global Platts Analytics expects global oil demand to grow by 4.6 million-4.8 million b/d in 2022 to average 103 million b/d, beating pre-pandemic levels.
Oil prices will likely remain at the same “stable” level in 2022, Novak said, as the market remains balanced and there were currently no risks to substantially impact the price.
“We see the current level of $75/b as quite stable. Plus or minus 10%, such parameters may remain the next year … I do not see what risks can lead to serious deviations,” he said.
Dated Brent was assessed by S&P Global Platts at $75.67/b on Dec. 23, down from $83.125/b on Nov. 24, when the first case of omicron strain was reported.
Nord Stream 2
In 2021, Russia’s gas production will rise 10% on the year, Novak said, while exports will increase by 9.5%. According to the energy ministry’s data, Russia’s gas production totaled 692.9 Bcm in 2020, down 6.1% from 2019 levels.
At the same time, Novak expressed hope that the certification process of the now-completed 55 Bcm/year Nord Stream 2 pipeline will be completed in the middle of next year to ease the pressure of high gas prices.
The pipeline’s second string will be filled with gas to build the required inventory and pressure by the end of December, Gazprom said Dec. 23, but commercial operations can not begin without regulatory clearance.
In mid-December, the German energy regulator said there would be no final decision on the certification of the operator of the pipeline in the first half of 2022.
“Given their will, the process can be completed earlier,” Novak said.
Russia has repeatedly said that the early launch of Nord Stream 2 would help ease the current high gas prices in Europe, which have hit new record highs this month on winter supply concerns.
“Everything that is happening regarding Nord Stream 2 is very surprising, since there is an adamant confrontation for the infrastructure that has already been built to start operating,” Novak added.
According to Platts price assessments, the TTF day-ahead contract was priced at an all-time high of Eur182.775/MWh on Dec. 21, easing to Eur124/MWh on Dec. 23 amid warmer weather.
Russia forecasts gas prices to remain high in 2022 due to the balance of supply and demand, which could also be affected by weather conditions and storage levels, Novak said.
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Source: Platts
