Russia to drill new oil wells to be ready to go when current OPEC+ production cut deal expires in 2022

A new project to boost the economy’s sustainable development and support the suffering energy sector during the Covid-19 global crisis has been approved by the Russian government.

According to the press service of Russian First Deputy Prime Minister Andrey Belousov, a government commission which met on Tuesday agreed with the energy and finance ministries’ proposals to back oil producers by setting up a fund for “unfinished oil wells.”

The new wells will be drilled in 2020-21 but will stay idle until April 2022 when the current OPEC+ agreement expires. The wells will be subsequently launched during next few years in line with the expected growth in energy demand.

The new project, to be finalized by June 5, aims to help save the load and solvency of oilfield servicing companies at a time of global production curbs. “The measure will stimulate oil companies to invest funds into further development of fields,” the government’s statement said.

The global drop in demand for hydrocarbons and the OPEC+ agreement to reduce oil production entail a reduction in the volume of orders for this sector, which employs more than 300,000 people, the report said.

As part of the historic deal with the Organization of the Petroleum Exporting Countries, Russia agreed to cut its oil production by around 2.5 million barrels per day (bpd) to 8.5 million bpd in May and June.

For more stories on economy & finance visit RT's business section