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Rosneft Hasn’t Ruled Out Extending Output Cuts Beyond 2018

The OPEC/non-OPEC production cut deal will impact Rosneft’s short- and medium-term production forecasts, and Russia’s biggest oil producer doesn’t rule out that the pact could be extended beyond the end of 2018, Rosneft’s first vice-president Pavel Fedorov said, presenting the strategy through 2022.

“On the whole ... this OPEC agreement obviously will affect our short-term targets, all the more so I don’t rule out it could be extended,” said Fedorov.

Russia is leading the group of some dozen non-OPEC producers who are jointly trying to ‘stabilize’ the oil market and oil prices together with OPEC by removing 1.8 million bpd off the market until the end of 2018.

Last week, OPEC said in its latest Monthly Oil Market Report that it expected “a balanced market by late 2018.”

Rosneft’s strategy until 2022 factors in an oil price of $47 per barrel—a very conservative forecast, Fedorov noted.

In its plan, Rosneft targets to reduce unit operating costs by 2-3 percent annually; boost production and increase the flow rate from new wells; develop the gas business; increase drilling efficiencies; develop the petrochemical business; optimize the investments portfolio; increase digitalization; and start a pilot project in retail.

Related: Nuclear Power's Resurgence In The Middle East

Over the weekend, Rosneft signed a deal with the Venezuelan government for the development of two of its offshore gas fields for a period of 30 years. The Russian state major will have the rights to sell all the gas it extracts from the fields—Patao and Mejillones—for a period of 30 years, including in the form of LNG.

The two fields, according to a Rosneft press release, hold a combined 180 billion cu m of natural gas. The target annual production rate the company’s local subsidiary, Grupo Rosneft, is looking at is 6.5 billion cubic meters of gas over a period of 15 years. 

By Tsvetana Paraskova for Oilprice.com

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