Rosneft increased its crude oil production by 70,000 bpd over the last two days, the company told investors, in preparation for an OPEC+ decision to start easing production quotas, Bloomberg reports, citing Russian asset manager Renaissance Capital.
The company has a spare production capacity of between 120,000 and 150,000 bpd, and its average daily production during the first quarter was 4.57 million bpd.
According to Rosneft’s press service, the company is still producing with the quota assigned it under the OPEC+ deal but the fast ramp-up is a clear indication Russia’s largest oil producer is eager to return to higher daily rates, especially after the sevenfold increase in attributable net profit in the first quarter thanks to improving prices. At the release of the Q1 figures, Rosneft said it could quickly bring back production of 100,000 bpd.
Last week oil prices started sliding down after reports quoting Saudi Arabia’s and Russia’s energy ministers as saying the two are considering relaxing the production quotas in light of the continuing decline in Venezuela’s oil production and the re-imposition of U.S. sanctions against Iran.
In an interview with Bloomberg, Alexander Novak said no decision has been made yet about relaxing the quotas. The decision, he said, will be made no earlier than June 22. The UAE’s Oil Minister, Suhail al-Mazrouei, said that this decision would have to be unanimous as well. Related: Goldman: The Oil Price Rally Isn’t Over Yet
It seems, however, that most traders are already pricing in an increase in production from OPEC and Russia. Saudi Arabia’s daily average is also rising, hitting the highest in seven months last week, according to tanker tracking data cited by Bloomberg.
Citigroup commodity analysts earlier this month estimated that Russia has 408,000 bpd in idled capacity, which constitutes 4 percent of its total, which stands at 11.3 million bpd. That’s a lot less than Saudi Arabia’s idle capacity, which stands at 2.12 million bpd, but is apparently still a significant enough portion of the total.
By Irina Slav for Oilprice.com
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