Russia's oil producers are drilling at a pace not seen for at least five years as the country prepares for both an easing of OPEC+ production limits and the possibility of an easing of some international sanctions over the invasion of Ukraine.

The level of activity, which is also more than a third higher than pre-war levels, is the latest sign that the Russian oil industry is resilient in the face of Western sanctions. These sanctions were aimed at hampering the country's ability to produce crude oil in the long term by restricting access to modern technology and equipment.

Drilling activity means that Russia's total capacity to produce crude oil and a light oil called condensate is 11 to 11.5 million barrels per day, virtually unchanged from 2016, says Ronald Smith of Emerging Markets Oil & Gas Consulting Partners LLC.

Consolidation at a high level

Russia's production wells averaged more than 2,370 kilometres (7.8 million feet) in January and February, according to the latest available data obtained by Bloomberg. That's more than the seasonal average for the first three years of the Kremlin's invasion of Ukraine, which led to widespread restrictions on the availability of Western oilfield services in Russia.

Although some major foreign suppliers left the country after the invasion, they sold Russian units to local managers, retaining equipment and expertise in the sanctioned country, while other suppliers, including SLB Plc and Weatherford International Plc, continue to operate, albeit on a smaller scale.

Mature fields

Over the past three years, local service companies have also managed to find alternative equipment suppliers or develop their own equivalents, explains Dmitry Kasatkin, Partner at Kasatkin Consulting, which also employs a number of former Deloitte consultants in the region.

Russian oil producers need to keep up their drilling pace to ensure that the country can increase crude oil production in line with OPEC+ targets.

Drilling for the future

However, there is one area where Russia has fallen behind in oil production: exploration.

In January and February, the monthly drilling rate to discover new oil reserves averaged just 46 kilometres, compared to almost 68 kilometres in the first two months of last year and almost 75 kilometres in the pre-war winter months of 2022.