(MENAFN) Russia's Deputy Energy Minister, Pavel Sorokin, has announced that the country's oil production will remain stable until 2025. This statement follows Russia's decision to cut its crude
oil output by 500,000 barrels per day until the end of the year to bolster oil prices, a significant contributor to the country's budget revenues. Despite Western sanctions, Russia's oil production has remained resilient and surpassed expectations of a steep decline.
Sorokin stated in an interview with Neftegazovaya Vertikal magazine that oil production is expected to remain at a steady level until 2025, according to current forecasts. JP Morgan had previously predicted that Russia would be able to maintain its oil output at pre-Ukraine conflict levels, thanks to consistent demand from China and India. However, the bank
had also highlighted that Russia could face challenges in rerouting some of its oil product exports away from Europe.
To increase the resilience of its oil supplies, Russia is planning to set up oil reserves. Sorokin stated that there are discussions on various projects to create such reserves. He believes that having reserves would increase the flexibility of supply, considering the current situation in international markets, high volatility in demand, and oil prices. Russia currently lacks large oil storage facilities, which limits its production and exports.
Sorokin's comments suggest that Russia is looking to establish oil reserves to diversify its export destinations and mitigate any potential risks. Russia has managed to reroute oil exports from Europe to India, China, and Turkey, which have been purchasing cheap barrels despite the G7's $60 price cap on Russian crude
. The establishment of oil reserves would give Russia more flexibility in production and exports, enabling it to adapt to market changes and fluctuations in demand.
In 2020, a Russian official had stated that the construction of storage facilities for at least 100 million tons, or more than 700 million barrels, could take up to four years. Russia's plans to increase its oil reserves are part of its long-term strategy to strengthen its oil industry and maintain its position as one of the world's top oil producers.
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