The Council of Ministers signaled a partial rebound in oil production planned for May 2022 after a dip in April, with Russian Deputy Prime Minister Alexander Novak noting that conditions had begun to stabilize in the early days of the month.
Novak stated that May’s initial indicators outpaced April’s, reflecting a stabilizing trend. He observed a rise in output compared with April and expressed optimism that May would see partial improvements and stronger performance overall.
He also highlighted that Russia has started selling oil to several new buyers, with supply volumes expanding in multiple directions as a result of these new market connections.
Novak explained that Russian oil companies are actively exploring new routes in response to the shifting market, building new supply chains. He pointed to growing demand from new buyers and a wider export footprint, including increased shipments to Asia-Pacific regions, as part of this strategic adjustment.
Moscow is considering a set of infrastructure projects aimed at diversifying oil supply. One option under discussion involves extending the ESPO pipeline to reach China, along with plans for new port facilities. A working group has been established to evaluate these matters further.
It is worth noting that the European Union continues to debate the sixth package of sanctions against Russia, which contemplates restrictions on Russia’s oil exports.
Reports from Bloomberg indicate that Russia is prepared to offer substantial discounts on oil sales directly to India amid international pressure and softened demand, with proposals to price Ural oil at discounts reaching as high as $35 per barrel.
Russian oil remains under sanctions from the United States and the United Kingdom.
From 1 to 29 April 2022, Russia’s average daily production of oil and gas condensate stood at approximately 1.372 million tons, down about 9% from March, when the daily average reached roughly 1.504 million tons. Analysts noted that the decline in March, relative to February, was modest, but the drop accelerated in April after the first half of the month. Since spring 2021, Russia had maintained a relatively steady growth trajectory in oil output, yet the year 2022 brought unprecedented restrictions tied to the Ukraine conflict that disrupted several supply chains.
The sanctions restricted investments in crude oil exploration, production, and processing within Russia. Additionally, many Western companies and traders have reduced or halted purchases of Russian oil.
Russia’s finance minister warned that sanctions could cut oil production by as much as 17 percent in 2022. In response, the first deputy energy minister announced the formation of a list of prospective infrastructure projects designed to diversify the oil and gas supply, though a completion timeline was not disclosed. President Vladimir Putin has urged accelerating energy export infrastructure development to southern and eastern markets, including rail, pipelines, and ports. He emphasized the need to collaborate with oil and gas companies to craft a plan to expand export networks to Africa, Latin America, and the Asia-Pacific, ensuring more routes from Western and Eastern Siberia support new pipelines and terminals for crude and gas shipments.