MOSCOW (Reuters) – Russia is taking a leaf out of the U.S. shale playbook so it can ramp up oil production quickly and hang on to its share of the global market when demand finally recovers after the coronavirus pandemic. At least two state-owned banks, Sberbank (SBER.MM) and VEB, plan to lend oil firms some 400 billion roubles ($6 billion) at effectively almost zero interest rates to drill about 3,000 unfinished wells, officials involved in the scheme told Reuters. Once oil prices recover, the wells can be finished off faster than starting from scratch so Russia can get its output back to levels reached before it agreed along with other leading producers to cut supply because of the fallout from COVID-19. U.S. shale producers tend to drill but not complete wells when oil prices are low, rather than freezing all activity, so they can finish off the wells and quickly boost production when demand picks up. A geologist advising Russian oil firms said the new wells would add at least 200,000 barrels per day to output based on average flow rates but if their assumptions about large reserves pan out the wells could boost output by 2 million barrels. The… continue reading
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