Russia’s drilling activity slumps from record high amid OPEC+ cuts

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Russia’s oil industry has slowed drilling activity this year from the record highs seen in 2023, as Moscow is limiting production as part of the OPEC+ deal and working to boost its compliance rate.

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In the first half of 2024, rigs employed by Russian oil companies drilled a total of 14,370 kilometers (8,930 miles) of production wells in Russia, down by 2.5% compared to January-June 2023, industry data seen by Bloomberg News showed on Friday.

Drilling at Russia’s oil production wells likely beat a post-Soviet record in 2023, industry data showed earlier this year.

The record-high rates of drilling in 2023 suggested that Russian producers were trying to maximize production from older oilfields to keep production rates from falling, analysts said in January, commenting on the record-high drilling rate.

But this year, Russian drilling activity has slipped from the 2023 record highs as Russia is reducing more of its crude oil production.

“They drill enough to maintain the plateau and have some spare capacity, but not more,” Sergey Vakulenko, a scholar at the Carnegie Endowment for International Peace, told Bloomberg.

Previously, Vakulenko was an executive at a Russian oil producer for a decade.

In recent weeks, Russian seaborne crude oil exports are estimated to have dropped to their lowest level since August 2023, as Russia’s refinery runs are rising and Moscow is working to comply with its OPEC+ production quota.

Russia has pledged to comply with the cuts and to compensate for previous overproduction while its domestic refining levels are nearing the highest in six months in July amid the peak demand season.

Last week, Russian Deputy Prime Minister Alexander Novak said that there is no discord between Russia and OPEC+ over Moscow’s recent poor compliance with the group’s production cuts.

Russia’s Energy Ministry said last week that the country remains fully committed to the OPEC+ agreement. Russia exceeded production volumes in June, but output has declined in each month since April, per estimates from independent sources approved by the agreement, the ministry said.