EMEA News
Gazprom Denies Rumours of Output Reduction Discussions, Says There's No Need for Production Cuts
Another day, another contradictory declaration from Russia regarding oil output cuts, this time from Alexei Yankevich, CFO of state-run Gazprom Neft, who told Russian media this week that his company is not discussing any reduction strategies and sees no need to cut production.
He said, "Our company is not changing its plans so far, no one has even started such discussions with us."
This is in sharp contrast to Russia's energy minister Alexander Novak earlier stating that the country is willing to attend a special meeting between members of the Organization of the Petroleum Exporting Countries (OPEC) and non members to determine ways to stabilize the global oil market.
However, Yankevich said that if an agreement to reduce output were reached on the international stage, "We are a commercial company and act based on the situation" - but he added: "At the moment, we see that for us, a cut in production is not economically justified."
Although Gazprom will reportedly increase crude output this year and into 2017 thanks partly to new year-round shipments from the Novy Port field on the Yamal Peninsula, it could begin closing wells if prices drop below $15 per barrel
Yankevich remarked, "The whole forward-looking economics accounting for future spending is positive at $30/b for all projects."
Plummeting crude prices have sunk bunker prices to levels not seen in well over a decade, but both rallied last week on speculation that there would be co-ordinated production cuts - with the resulting "frenzy" dismissed as "idiotic" by Rosneft spokesman Mikhail Leontyev.
Several analysts have publicly ridiculed the notion of Russia and OPEC converging to discuss output cuts: Chris Weafer, senior partner at Macro-Advisory in Moscow, recently stated that that US shale producers are the real target of Saudi Arabia-led high output and that "I can't see Russia or Saudi cutting their own production to help the shale industry."
