London — Russia is well placed to maintain oil production levels above 10 million b/d beyond the next decade, despite western sanctions limiting its access to technology and capital, the International Energy Agency said Thursday.
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Aided by consistent upstream spending through the oil price downturn, Russia aims to halt declines and improve recovery at its major producing fields Western Siberia and the Volga-Urals basin, the IEA noted in a new long-term outlook for major oil and gas producers.
As a result, the IEA said it now expects Russian oil production to remains above 10 million b/d into the 2030s before a gradual decline to 9.4 million b/d in 2040.
The new forecasts mark a sharp upward revision from the IEA's latest long-term energy outlook, which in November 2017 predicted that Russian oil flow would peak around 2020 before slipping below 10 million b/d before 2030 and falling to 8.6 million b/d in 2040.
Russia, which could agree to extend its existing oil output cooperation pact with OPEC by year-end, was pumping at record highs of about 11.36 million b/d in September, according to the energy ministry.
Western sanctions on Russia's Arctic, deepwater and shale resources have the potential to still constrain Russia's oil growth, the IEA said. It noted, however, that Moscow is seeking alternative, non-western funding sources and equipment, and encouraging domestic companies to invest more heavily in research and development.
"If maintained, current sanctions could affect the longer-term competitiveness of the Russian upstream by slowing its move into new, more complex resource areas such as tight oil, the Arctic and deep offshore," the IEA said.
Meanwhile, the IEA was more pessimistic on Venezuela's longer-term oil future because of its ongoing political and economic turmoil which has almost halved its oil production since early 2016.
Crude oil production decreased from 2.35 million b/d in January 2016 to 1.22 million b/d in September 2018, according to S&P Global Platts data.
Dwindling oil revenue, mounting debt, and falling investment and output has seen the flight of oil producers and service companies, and inflation is estimated by the IMF to have reached 1 million percent in 2018.
Under the IEA's latest central scenario, oil production in Venezuela will bottom out in the mid-2020s before beginning a gradual recovery back up to 2.5 million b/d by 2040.
Last year, the IEA forecast that Venezuela's oil output would reach 2.9 million b/d by 2040, up from 2.1 million b/d in 2025.
The IEA said the reversing current production declines hinge on boosting capital spending on infrastructure and maintenance of existing facilities. Key hurdles which could delay Venezuela's eventual oil recovery include potential long-term damage to Venezuela's production potential because of field neglect, a lack of capital, and expertise having deserted Venezuela in recent years.
"There are few signs on the horizon of the macroeconomic or policy changes that would arrest the decline in Venezuelan output," the IEA said.
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