Putin called government-announced reduction in oil production growth

Vladimir Putin's announcement last Friday that Russia is increasing energy production does not fit well with the government's promise to cut oil production, Bloomberg pointed out.

Details . Putin, during his speech at the St. Petersburg International Economic Forum (SPIEF), said : "Production is growing, and this suits us quite well inside the country too." He did not specify during what period he sees an increase in production. This statement by the president was made in response to the question of how the West managed to prevent Russia from selling oil without a discount and what Putin is doing to make Russia get more money for oil and gas.

• These words, according to Bloomberg, refute the statements of the Russian government about the fulfillment by Moscow of the promise to reduce oil production. Deputy Prime Minister Alexander Novak said in mid-May that since May, Russia has achieved a reduction in oil production of 500,000 barrels per day.
• Then, on Friday, Energy Minister Nikolai Shulginov said at the SPIEF that oil and condensate production in Russia in 2023 would be about 20 million tons lower than in 2022. “We focus on the forecasts provided for by the socio-economic development forecast. Today we are seeing a picture that production is 8-10% lower than those forecasts,” he said.
• At the same time, as Bloomberg notes, indirect signs indicate that Russia could not fulfill the promise to cut oil production. The average daily volume of Russian oil supplied by sea for the period May 22 to June 18 decreased by 212,000 barrels compared to the period May 15-June 11. But it is still 250 thousand barrels higher than the average for the period from January 30 to February 26. At the same time, Russia promised to cut production by 500 thousand barrels from the average level in February.
• In early May, Novak commented on reports that Russia had increased oil supplies by sea, despite a promise to cut production. The Deputy Prime Minister said that "individual journalists" who write about the growth in Russian oil exports do not take into account the reduction in its pipeline supplies. However, according to Bloomberg, oil that used to be delivered to Germany and Poland via the Druzhba gas pipeline was sent for offshore shipments back in January and February, before the promise to cut production came into force. Now the volume of oil supplies via the pipeline to Hungary, Slovakia and the Czech Republic is stable and has been at the level of about 240,000 barrels per day since February.
• Since the beginning of the war, the Ministry of Energy has stopped publishing monthly statistics on oil production. In April, Reuters, citing a source in the Russian government, wrote that oil production from March to the end of the year will be reduced by 500,000 barrels per day and will amount to about 9.6 million barrels per day. Natural gas production, according to Rosstat, in April decreased by 15.6% compared to April last year and by 10.7% compared to March 2023.

Context .On February 10, Novak said that in March the Russian Federation is going to voluntarily reduce oil production by 500,000 barrels per day (about 5%). According to him, this was supposed to contribute to the "restoration of market relations" after the imposition of restrictions on the sale of oil by Western countries on Russia. However, both in March and in April , the indicators of sea exports of Russian oil made it possible to cast doubt on Moscow's fulfillment of this promise.