New oil well drilling in Russia has surged to its fastest pace in five years, even as global oil prices have declined. The increase in drilling activity suggests that Russia anticipates a potential reversal of OPEC+ production cuts and the possible removal of U.S. sanctions.
The current drilling levels are approximately 30% higher than before the Ukraine conflict, indicating the strength of Russia’s energy industry despite Western sanctions. These sanctions were initially expected to cripple local producers by restricting access to Western technology and equipment, particularly in the oil and gas sector.
“We can confidently say that the Russian oilfield service industry has largely adapted to the sanctions,” Ronald Smith, partner at Oil and Gas Consulting Partners, told Bloomberg. “While not all replacements are perfect, there are now adequate substitutes available,” Smith added.
This increase in drilling activity has helped boost Russia’s crude oil and condensate production capacity to between 11 million and 11.5 million barrels per day, the same level the country achieved in 2016, Smith said.
While some drilling technologies, such as horizontal leg lengths, fracking stages, and well bore positioning, may have regressed, experts suggest that the overall impact of sanctions and the exit of Western service providers has been less severe than many had predicted three years ago. “The effect of the sanctions and the withdrawal of Western providers is much lower than expected,” said Sergey Vakulenko, a former Russian oil executive and researcher at the Carnegie Endowment for International Peace.
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