Russia’s crude oil output could surpass 12 million bpd by 2035

Russia’s crude oil and condensate production could rise to more than 12 million bpd by 2035, if global demand for liquid hydrocarbons continues to grow, Russia’s second-largest oil producer, Lukoil, said in a new forecast.

In the report ‘Major Trends in the Global Liquid Hydrocarbon Market to 2035,’ Lukoil has modeled three different scenarios for Russia’s opportunities and challenges in oil production in the long term.  

The ‘Equal Opportunities’ scenario considers that global oil and gas demand will rise and Russia can maintain an annual production level of above 600 million tons—or over 12 million bpd—for a long time, Lukoil said. 

The ‘Evolution’ scenario assumes a change in Russia’s current tax system to a system based on taxation of profits instead of taxation of revenue, and the Western sanctions on Russia’s oil industry remaining in place for a long time. Under this scenario, Lukoil expects Russia’s crude oil and condensate production to gradually fall to just over 10 million bpd by 2035.

Currently, Russia pumps around 11.2 million bpd of oil and condensate.

The ‘Climate’ scenario assumes that oil demand is expected to decline due to stricter climate policies in leading economies, including Russia. This model forecasts that Russia’s oil and condensate production will slump to below 8 million bpd by 2035.

“This scenario also assumes that the taxation of the oil industry is going to become more burdensome through CO2 emission fees, which will adversely impact investment into oil production,” Lukoil said.

Referring to the US sanctions on Russia’s oil industry, Lukoil said that although these restrictions are unlikely to impact domestic production in the near term, they will have a significant impact in the long term. 

“[I]n the longer term the damage done by the sectoral sanctions to the country’s oil production may prove to be tangible. The success of the Russian oil industry will depend on whether Russia can create its own offshore and non-conventional development technologies,” Lukoil said.

Commenting on the OPEC+ deal, which Russian firms have criticized, Lukoil said that “We expect that Russia will remain a party to the OPEC+ Agreement for a long time, coordinating its activities with other oil-producing nations.”  

This article was originally published on Oilprice.com