EMEA News
Russia To Boost Crude Output In 2017, Says Freeze Deal "Impossible to Agree"
What was mentioned fleetingly last week has now been stated in full force just days before Organization of the Petroleum Exporting Countries (OPEC) members and non-member congregate to discuss production caps: Russia, a key player in the talks, says it will boost instead of decrease output next year.
Moreover, an unnamed source for the country's top producer, Rosneft, told Reuters, "We think that it is impossible to agree ... no one trusts anyone, everyone has been just ramping up production."
Despite Russian president Vladimir Putin recently meeting with Saudi Arabia deputy crown prince Mohammad bin Salman and expressing the need to stabilize oil prices, five of Russia's leading oil companies are reported to be boosting output above and beyond the record levels achieved over the past few months.
According to their forecasts, Rosneft, private Lukoil, private producer Surgut, state-owned GazpromNeft, and Tatneft will collectively raise production by around 1.6 percent on average in 2017.
Swiss bank UBS forecasts a rise of 2.7 percent next year of Russia's overall oil production, some of which will come from hard-to-extract regions where cost of production is reportedly between $10 and $35 per barrel – making such extraction economically viable even in the current downturn.
For Rosneft alone, the share of hard-to-recover oil production is expected to rise from 7 percent this year to 11 percent of the company's total crude output by 2020.
A source close to Russia's energy ministry, which has delivered conflicting messages about its willingness to participate in a freeze, told Reuters, "Production is breaking new records ... it would be stupid to freeze production, let alone cut it, as state coffers need money and companies are starting new fields."
Last week, Anton Siluanov, finance minister for Russia, set the tone for his country's course of action by stating, "A freeze on the part of several countries ... will not produce the effect that some people are anticipating."
