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- Gazprom Neft (OTCPK:GZPFY), the oil-producing arm of gas giant Gazprom, and the third largest oil producer in Russia, has plans to increase drilling activity by 50% yoy in 2022 according to production executive Sergey Doktor.
- With production up ~300kb/d of oil equivalent since 2016 to more than 2mb/d in Q3 2021, the Company now produces as much as the entire Bakken oil formation; since 2016 upstream investments have fallen at Gazprom Neft.
- Earlier this year, GZPFY indicated the Company could see 10%+ production growth in 2022.
- While oil bulls (NYSEARCA:USO) (NYSEARCA:XOP) (CL1:COM) (CO1:COM) are likely to argue that after adjusting for condensate production (excluded from the current OPEC+ agreement), Russia is under-producing it's quota, and losing production growth momentum; an indication that increased upstream investments are needed to sustain the production base.
- Conversely, bears point to excessive OPEC+ spare capacity as a long-term headwind to oil price, and see capex increases from major producers like Russia as bearish.
- With 200kb/d+ of production growth coming from ~18% of the production base (GZPFY at ~2mb/d of production vs. Russian in aggregate at ~11mb/d), analyst focus will shift to Rosneft's (OTCPK:RNFTF) outlook for the year, given the Company's leadership position in Russian oil production (RNFTF at ~4mb/d of production).
- As we head into the next OPEC+ ministerial meeting on January 4th, analysts will be looking for any clues of the cartel's plans for 2022.