IMF sees quick Russian oil output recovery once OPEC+ deal is done, urges investments
The International Monetary Fund expects Russian oil output to recover quickly once a global deal on production cuts tapers off, while also urging investment in the oil sector to keep up current output, the fund said.
In its February report, the IMF also said that the full-cost break-even price for Russia is closer to $30 to 40 per barrel.
“A prolonged period of oil prices below these levels could threaten the long-term viability of the oil and gas sector in Russia,” it said.
Russia is a party to the deal with the Organization of the Petroleum Exporting Countries and other leading oil producers, a group known as OPEC+, aimed at curbing oil output to cushion the fallout from the pandemic and weak demand.
Oil production in Russia declined last year for the first time since 2008 and reached 10.27 million barrels per day, its lowest in nearly a decade amid the global deal.
According to the deal, oil production at OPEC+ is expected to gradually increase until the agreement expires in April 2022.
“Keeping oil production at current levels will require significant investment; the full-cost break-even price is therefore closer to $30–40 per barrel,” IMF said about Russian oil output.
Last year, Russian oil and gas producers significantly cut their investments, by up to 20%, amid low energy demand, undermined by the pandemic.
“Cash break-even prices in Russia are around $10 dollars per barrel, thanks to low operating costs, progressive taxes, and the stabilizing effect of the exchange rate. This suggests production will recover quickly once the OPEC+ production cuts are tapered even if oil prices remain low.”
“However, a prolonged period of oil prices below these levels could threaten the long-term viability of the oil and gas sector in Russia,” IMF said.
Source: Reuters (Reporting by Katya Golubkova, Vladimir Soldatkin and Olesya Astakhova; editing by Larry King)