Russia intends to reduce oil production

The Russian Energy Ministry believes that oil production can be reduced by 14 percent in the next five years, and in the worst case, by 10 years. Crude oil output could fall to 460 million tons (9.2 million barrels per day) between 2020-2025 from 534 million tons last year. In the worst case, the country should be ready for a long-term energy strategy, which stipulates that oil prices will remain at around $ 31- $ 33 per barrel in 2016-2017, rising to $ 42 per barrel in 2020.

Another negative factor is the “lack of management influence with the main players in the oil market”. Efforts this week to provide a leverage on the oil market have been inconclusive. Russia and Saudi Arabia, the world's largest producers, reached a tentative agreement on Tuesday to freeze their output at January levels to prop up oil prices. The deal depends on cooperation with other suppliers. Iran, the second-largest producer in OPEC, has yet to say if it will backtrack on plans to restore exports after the lifting of international sanctions last month.

Energy Minister Alexander Novak at a government meeting voiced a "stress" scenario for the Russian oil industry. Russian companies may face the inability to attract loans to service those already taken. The ministry calculated a worst-case scenario, assuming that producers, with limited access to finance, would cut investments by at least 10-15 percent, and their contribution to GDP would shrink by 60-65 percent by 2022. Much will depend on the tax policy of the state, according to the ministry.

The Russian budget relies on energy for more than 40 percent and is now grappling with the longest recession in two decades. Even if Russia freezes production at the January level, this does not exclude an increase in total production in 2016 compared to a year earlier, since Russia increased production every month in 2015, and the output in January was at the post-Soviet level. Projects, slated for the near term to keep the country on track for growth, were planned with oil production stable at around 525 million tons until 2035, and the budget was set at an oil price of $ 50 a barrel for at least the next three years.