Putin enjoys oil boom as Russia sanctions fail to dent Kremlin coffers
Russian oil ban not enough to stop them funding war says expert
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Russia’s oil industry appears to be resisting the squeeze of Western sanctions with the country’s output rebounding to produce around 10.9 million barrels per day at the end of 2022. Banks, billionaires, and individuals with close ties to Russian President Vladimir Putin have been the targets of the sanctions but the Kremlin’s oil revenue appears to keep flowing in despite the invasion of Ukraine.
Last year, according to Bloomberg data, the total depth drilled in Russia was 28,000km, and the number of new wells started to increase by almost 7 percent, reaching over 7,800.
This increase in activity allowed Russian oil production to recover in the second half of 2022, despite export restrictions introduced by Europe and Western companies pulling out of their work in the country.
Vitaly Mikhalchuk, Director of Business Solutions and Technologies’ research division said: “This industry largely continues working just like before.
“Russia has been able to retain most oil-service competencies, assets and technologies.”
Similar to the fall of the Soviet Union, the Russian invasion of Ukraine roughly a year ago resulted in a dramatic transformation of the nation’s oil industry.
As a result, production dropped to little over 10 million barrels per day in April.
However, the sector recovered, producing close to 10.9 million barrels per day by the end of 2022, despite the exit of significant firms like BP, Shell, and Exxon from the nation.
This rebound can be partially due to the fact that indigenous firms like Rosneft, Surgutneftegas, and Gazprom made up the bulk of the market in 2021, while foreign producers only made up 15 percent of Russia’s entire oil-services sector.
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Western companies like SLB and Weatherford International remained in Ukraine despite the invasion.
Olivier Le Peuch, CEO of SLB, said in July that the business’ special corporate structure allowed it to operate in Russia while adhering strictly to US and EU sanctions.
On the other hand, Weatherford said that it had stopped making new investments or using new technologies in Russia in the previous year.
Since the commencement of the conflict in Ukraine in February of last year, Western nations have been imposing sanctions on Russia’s energy sector.
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There have been severe disruptions in the Russian energy market, and even Putin has acknowledged that the sanctions are having an impact.
The sanctions have reduced Russia’s oil exports, which has resulted in a fall in oil export profits.
Russian oil export revenues in December 2022 were $12.6 billion, almost $4 billion less than they were a year earlier.
Additionally, a $60 per barrel embargo on Russian oil has been organised by Western nations, adding to the strain on Russia’s energy sector.
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