Russia to Drill Idle Oil Wells Once OPEC Deal Expires

The Russian government has tentatively approved a plan on drilling idle oil wells in order to prepare for the restoration of oil production once the global deal on output curbs expires in 2022, according to a government statement published on Tuesday.

Russia has agreed to cut its oil production by around 2.5 million barrels per day (bpd) to 8.5 million bpd, lowest for more than a decade, in May and June as part of the deal with the Organization of the Petroleum Exporting Countries.

The office of First Deputy Prime Minister Andrey Belousov said a government commission met on Tuesday and agreed to support proposals of the energy and finance ministries to help oil producers to set up a fund of “unfinished oil wells”.

The move is aimed at helping the oil servings companies at a time of falling demand for their work amid the global production curbs and the spread of the novel coronavirus.

The statement cites Energy Minister Alexander Novak, who said that the oil producers will order services and equipment from the Russian oil servicing companies with the financial help of the local banks for drilling wells.

The wells will be drilled in 2020-2021, but they will stay idle until April 2022 when the current deal expires. The wells will be subsequently launched during next few years in line with the expected growth in demand.

“The measure will stimulate oil companies to invest funds into further development of fields,” the statement said.

The energy ministry was tasked with working on the project completion by June 5 for “further cooperation with the banking society”.