Russia’s war in Ukraine has been draining the country’s oil sector, with recent European sanctions closing off Russia’s best market and the restriction if its international expertise.
Under EU sanctions, Russia has been losing investments gradually with the Swiss-based trader, Trafigura’s latest exiting in July of its $85 billion investments in Vostok Oil.
In addition to that Russia lost 2 million barrel per day (bpd) in the East Siberian project, which intended to drive the next phase of Russian output growth.
Russian drilling was at a decade’s high last year, as the country has been producing below capacity since April 2020, in line with the OPEC agreement.
In light of the Russian oil sector being on the brink of a crisis, the Kremlin is expected to attempt extracting more cash from the industry to fund its war in Ukraine.
The Kremlin has already done the same before, by raising the price benchmark used for taxation and receiving a large special dividend from Gazprom, according to the National.
“They don’t have the ability to keep up the production volumes because they don’t have access to necessary technology,” said the EU’s energy commissioner Kadri Simson in response to Russia’s announcement that it would cut oil production in March by 500,000 bpd.
