Quote (Thor123422 @ 6 Jan 2024 05:47)
It's hard to get numbers but on the low end Russia needs $80 a barrel for crude to break even after drilling and transporting cost, but it could be as high as $110. It's hard to tell given the variable cost and increased complexity of having multiple intermediaries now.
The interesting fact though is even if they lose money they don't have much option to stop. So much of the Russian workforce is dedicated to oil drilling and refinement that even if you lose $10 a barrel, that's basically just a cost to keep people employed rather than sending a million people to the streets.
This means even if Russia loses money, they will continue drilling and bleed their reserves in the process. Which puts into perspective how detrimental an increased volume can be in the higher cost post-sanctions environment.
They also really want to sell refined products rather than crude products for the same reason. More workers employed, higher premiums since you've now put it through the refinement process.
And their natural gas revenues have gotten incredibly low which means a high margin easy transport source of revenue to subsidize the other fossil fuel operations during down times is gone.
Overall it's hard to say how badly Russia is hurt by sanctions and such, but you have to really stretch to maybe assume they are breaking even. In all likelyhood they are slightly losing money at current oil prices.
First of all, let’s start out with a disclaimer, you changed your name to sound like a generic Twitter bot. Why lol.
Your whole post seems to be written by ChatGPT. Every paragraph is wrong.
1) Russian breakeven crude oil production FOB export price is between 20 to 35$ depending on location and production field. You seem to confuse it with fiscal breakeven price for the budget which is determined by the budget, not the oil price. People that balance the budget have to assume some price of crude going forward as nobody can predict it and use that number to make budgetary decisions. Current average crude oil price is about $80 indeed.
Russian REBCO (Urals) crude oil has
always traded at a discount to BFOE as it’s a heavy sour. ESPO is better and stuff like Sokol and Arctic Light trades at a premium.
2) Data on employment within Russian oil & gas industry says the following:
Quote
Only 229 thousand people are involved in the oil and gas sector, or 0.5% of all those working in Russia, including 175 thousand people work in oil production, and 53.7 thousand people are involved in gas production.
.
3) You can’t stop oil wells that’s true due to the way this tech works as shuttering an oil well damages it, but you can shutter gas wells pretty easily. Gas is consumed domestically to heat and generate electricity.
4) Russia refines oil products first and foremost because its a huge country with domestic market that needs a lot of driving. Whatever is not needed domestically like fuel oil and VGO is exported. Russian jet fuel TS-1 is one of the hidden reasons Russias air superiority is a thing in this conflict.
5) Russian gas is majority produced by Gazprom that satisfies domestic markets FIRST before exporting. Gazprom is still stupidly profitable, (earning 4bn net in q3 2023).
This post was edited by Malopox on Jan 6 2024 05:50am