Russia to Produce More Oil This Year, Energy Minister Says

The Russian Energy Ministry has raised its forecast for the country’s oil production in 2018 to 551 million tonnes and to 555 million tonnes in 2019, minister Alexander Novak told reporters on Wednesday.

“Due to the recent decision on the OPEC+ deal on the gradual increase in oil production, we revised our forecast for oil production in 2018 and increased it by about 3.5 million tonnes to 551 million tonnes. In 2019, oil production, according to our forecast, will reach about 555 million tonnes,” he said, according to Kommersant.

The minister noted that these are preliminary estimates.

“A lot will depend on the dynamics of the market and the need to adjust our actions,” he added.

In June, the OPEC + agreement member countries decided to stop existing oil production restrictions and raise total production by 1 million barrels per day in an attempt to regulate rising global prices.

The upward revision of the oil production forecast comes at a time when the Russian government is undertaking a massive tax reform in the oil sector which, according to analysts, is bound to make an impact on oil production.

The reform, which will allow the nation’s producers to export crude and oil products duty-free while raising their costs at the wellhead, is set to get the go-ahead from President Vladimir Putin by year-end, bringing in much-needed funds for his multibillion-dollar plan to revitalize Russia’s faltering economy.

Starting next year, Russia will gradually lower export duties on crude and oil products until they’re fully abolished in 2024. At the same time, it will raise oil-extraction taxes by the same amount, keeping the fiscal burden for producer-exporters steady.