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Russian independent oil companies report output reduction, 21% export increase for 2022

It is reported that the ruble’s exchange rate drop, the growth of oil prices and difficulties related to oil sales in early 2022 resulted in the fact that the activities of many companies operating in the sector turned out loss-making, with most firms suspending exploration and field drilling and well servicing

MOSCOW, April 17. /TASS/. Independent oil companies reduced crude production last year for the first time since 2018, whereas their exports rose by more than 21% to a record 9.6 mln tons, General Director of the Association of Independent Oil and Gas Producing Organizations AssoNeft Elena Korzun said in an interview with the Oil and Gas Vertical journal.

The ruble’s exchange rate drop, the growth of oil prices and difficulties related to oil sales in early 2022 resulted in the fact that the activities of many companies operating in the sector turned out loss-making, with most firms suspending exploration and field drilling and well servicing, she said. "As a result, oil production by the sector of independent oil and gas companies decreased in 2022 first since 2018. Compared to 2021, it fell by 68,880 tons to 24.191 mln tons," Korzun added, noting that production even decreased in the sector of large independent producers, but it particularly concerned small companies with production less than 50,000 tons per year, which cut output by almost 19%.

That said, the companies operating in the sector boosted oil exports notably, which hit a record 9.6 mln tons compared with 7.9 mln tons in 2021. "Such an increase was due to limited possibilities of independent oil and gas companies on sales on the domestic market and the premium nature of the external market. In 2022, the share of supplies to the Kozmino port rose even higher, sales through Primorsk and Ust-Luga, towards Hungary grew, while exports via Novorossiysk, as well as towards CIS countries and Slovakia, fell sharply," she explained.

Small companies sell an average of 80-90% of oil on the domestic market, on which sales conditions were much worse last year than on the international market, Korzun added. "The volume of sales by the sector on the domestic market, the key one for small and medium-sized independent oil and gas companies, decreased. In 2021, independent companies supplied 16.465 mln tons to local refineries, whereas in 2022 - 14.156 mln tons. This was one of the reasons of a decrease in production volumes in the sector of independent oil and gas companies," she said, adding that independent firms boosted deliveries to plants owned by vertically integrated companies last year.

The share of independent oil producers in exploration of small and very small fields in Russia stands at 33%, whereas the whole sector accounts for around 4.5% of the country’s production, AssoNeft’s chief said.