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The oil output cuts in Russia have been holding back its top producer Rosneft from fully realizing its potential, the chief executive of the state-controlled oil giant, Igor Sechin, said on Wednesday.
“I should note that Rosneft has been limiting crude oil production in one way or another since 2017, which prevents the Company from fully unleashing its potential,” Sechin said in a statement discussing Rosneft’s first-half performance.
This year alone, Russia has pledged to cut its oil production by 500,000 bpd. On top of this, Moscow has also promised to reduce its oil exports in August by another 500,000 bpd and to cut September shipments by 300,000 bpd.
That’s not the first time Sechin has complained about the OPEC+ production cuts, as part of which Russia has been curbing output in one way or another for more than five years.
In June this year, Sechin said that Russia is exporting a smaller share of its oil output, losing market share compared to other OPEC+ members. Some OPEC+ members are exporting up to 90% of their oil output while for Russia, the share is around 50% of the total, according to Rosneft’s top executive.
Rosneft raised its oil and gas production by 7% in the first half of 2023, but its output had to be lowered in the second quarter, “given external production constraints,” Sechin said today.
Rosneft’s liquids production fell by 2.2% quarter-on-quarter to 3.9 million barrels per day in Q2, on the back of the production cap.
Revenues fell by 25.3% in the first half of 2023 compared to the same period last year, primarily due to the slump in oil prices, the company said.
Rosneft’s operations are also challenged by the continuous tax amendments Russia has implemented this year.
“The changing tax environment, including legislative changes already enacted and new initiatives, makes the Company's operations more challenging,” Sechin said.
By Tsvetana Paraskova for Oilprice.com
Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.