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Irina Slav

Irina Slav

Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.

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Russia’s Most Powerful Oilman: We're Fine With Any Oil Price

Sechin Putin

Rosneft is fine with any level of oil prices, chief executive Igor Sechin told Kommersant radio station as quoted by news agency TASS.

"We manage risks. If prices fall, we will work on increasing our market share," Sechin said, adding that if prices continued their current slide, Rosneft would focus on maintaining and expanding its market share.

"In fact,” Sechin said, “the first important thing is to maintain market prices. Secondly, this needs to be discussed. I think that the period of time until March 31 will be devoted to preparing universal solutions, not just manual control."

Separately, Sechin told media in Singapore that the oil market was already adjusting to the Iran sanctions, Reuters reported earlier this week, quoting Sechin as saying it would be “silly” to make any price forecasts at the moment when it was uncertain what Washington’s next moves against Tehran would be and what steps other large oil producers would take to mitigate any adverse effects from these moves.

Meanwhile, however, Rosneft is having its own sanction troubles. With U.S. legislators preparing more sanctions against Moscow and state-owned entities, Rosneft is trying to persuade oil trading houses to take on themselves the risk of failed payments because of sanctions. Reuters reported that the company wanted to renegotiate the terms of its contracts with commodity traders and include penalties in case of failed payments next year.

“No sanctions ... shall terminate or amend any obligations of the parties stated by the contract,” a tender document that Reuters saw stated. One trading house, however, has refused to renegotiate the terms of its existing deal with Rosneft, a source from the house told Reuters.

Other Russian oil producers are doing this as well, and are arguing in favor of a currency switch for these payments from the greenback to the euro.

By Irina Slav for Oilprice.com

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  • Mamdouh G Salameh on November 15 2018 said:
    If Rosneft’s chief executive Igor Sechin is boasting that his company is fine with any level of oil prices, he should thank his boss President Putin for the diversification drive of the Russian economy that he has started immediately after the oil price crash of 2014 and the imposition of US sanctions on Russia.

    In 2014 and before the global collapse of crude oil prices, 50% of Russia’s budget and about 68% of its export revenues came from oil and gas exports. As a result of the diversification, Russia’s economy can actually now live forever with an oil price of $40 or less. Moreover, Russia’s budget dependence on oil and gas export revenues has declined for 68% in 2014 to 40% now.

    Rosneft can now concentrate on expanding its market share long-term with the knowledge that it is Russia’s primary oil operator in the Russian Arctic which is reported to have more than $8 trillion worth of untapped oil and gas. This could have a very significant impact on the global oil market and prices in that it could, in a few years, add more than 1.5 million barrels of oil a day (mbd) to Russia’s current oil production of 11.4 mbd thus consolidating Russia’s position as the top oil producer in the world well into the future.

    Moreover, Rosneft is busy expanding its oil market share in the world’s largest oil-importing country China.

    Dr Mamdouh G Salameh
    International Oil Economist
    Visiting Professor of Energy Economics at ESCP Europe Business School, London
  • Corvettekid on November 16 2018 said:
    Rosneft and the Russian oils need $60/bbl. to break even. They are bleeding cash without state subsidies. Their CAPX has been decimated going back 30 years. Western Siberia low-hanging fruit is almost all gone, and East Siberian drilling and transportation costs add $20/bbl., if not more.

    There's a reason why Russian oil companies are so cheap. They don't make money for shareholders, they make money for Putin.

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