Lukoil says Russia needs to work with OPEC to limit oil supply

Lukoil says Russia needs to work with OPEC to limit oil supply
Updated 25 January 2016

Lukoil says Russia needs to work with OPEC to limit oil supply

Lukoil says Russia needs to work with OPEC to limit oil supply

MOSCOW: Russia needs to start working with OPEC to cut oil supplies to the world market to try to support prices, Leonid Fedun, vice-president of Lukoil, Russia's second largest oil producer, was quoted as saying on Monday.
"In my opinion, if such a political decision is taken, Russia should jointly work with OPEC to cut supply to the market... It's better to sell one barrel of oil at $50 than two barrels at $30," Fedun told TASS news agency in an interview.
OPEC and Russia, the world's top oil producers, have refused to cooperate to help buoy global oil prices as they were defending their market share from each other and the United States, where shale oil output had taken off over recent years.
As a result, Brent has fallen to around $31 per barrel from $115 in the middle of 2014, on the oversupply and a weaker Chinese economy, causing shale oil production to decline in the United States.
Weak oil prices are also hitting Russia's commodity-dependent budget and the ruble, which touched all-time lows of around 86 per US dollar last week.
OPEC has always said it would agree to cuts if other producers such as Russia joined such a move.
However, Russian officials have said severe weather conditions do not allow a manageable production cut and that they expected the global market to rebalance on its own after the most costly producers cut output.
The Russian Energy Ministry has slightly revised down data on oil production in the country in December to 10.80 million barrels per day (bpd) from a preliminary reported 10.83 million bpd, still its post-Soviet high.
Lukoil Chief Executive Vagit Alekperov told Reuters last week that total oil production in Russia could decline by 2-3 percent this year and possibly more if the government raises taxes.
Lukoil's own oil output exceeded 100 million tons (2 million bpd) last year, the company said earlier.
It did not give a break down by regions, although energy ministry data showed it was pumping an average of 1.7 million bpd in Russia alone.
Fedun, a mastermind of Lukoil's expansion abroad, said the company's output was unlikely to remain as high as last year but did not give a figure.
"The practice of filling the market with cheap oil at any cost is wrong — half a year or a year later it could be sold at twice as high," he said.
Fedun added Lukoil was preparing to cut production at its West Qurna-2 project in Iraq.
"Earlier, the Iraqi government said that they are ready to take out 300,000-500,000 bpd from the market. Our share will be proportional," Fedun told TASS.
Iraq was pumping an average of 4.2 million bpd in December, according to a Reuters survey, with production at West Qurna-2 last reported at 450,000 bpd.