Russia could boost its already record-high crude oil production by another 4 million barrels daily, said Rosneft’s head Igor Sechin. Sechin, speaking at the 5th Eurasian forum in Verona, Italy. He added that the increase will be pursued “if the market needs it.”
Russia recorded an average daily production rate of 11.11 million bpd last month, up 4 percent from August. Reuters recalls that in 2015, Sechin made another bold statement, saying that Russia’s output could increase by more than 14 million bpd over the next 20 years.
The production raise suggestion made by Rosneft’s chief, coming amid negotiations with OPEC on an output freeze or cut, is better understood in light of his forecast that by mid-2017, the persistent glut on international oil markets will have disappeared and prices will average $55 a barrel.
Russia daily Kommersant quotes Sechin as saying that despite the pickup in drilling activity in the U.S., the country’s total output will remain below 2015 heights, which will push prices above US$55 next year. He added that various fundamentals estimates, including Rosneft’s own, suggest that by 2040, consumption growth will hit 15 million barrels daily, which would warrant a matching rise in production.
In line with growing optimism about a concerted market-rebalancing effort on the part of OPEC and non-OPEC producers, Russia’s Economy Ministry revised last month its base scenario for 2016-2019 oil prices from US$25 a barrel to US$40 a barrel, Kommersant reports.
Russia made it clear in September that it was willing to join a production freeze, but only a freeze, not a cut. Still, a cut may still be on the table but it, as well as a potential freeze, would depend on OPEC reaching a consensus first. Russia’s Energy Minister and Saudi Arabia’s Oil Minister Khalid al-Fatih are meeting over the weekend to discuss the progress of negotiations.
Meanwhile, Rosneft, along with Gazprom Neft and Lukoil, are all launching new production projects next year, and Lukoil has even announced its plan to spin off or sell its downstream operations in Europe to focus exclusively on exploration and production.
By Irina Slav for Oilprice.com
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