Russia’s biggest oil company said on Saturday that it will remain flexible with production volumes in 2017, adding that its board of directors has already evaluated plans for 2017-2018.
State-run Rosneft, responsible for more than 40 percent of Russia’s oil production, said in a statement cited by Reuters:
“The plan is formed on the basis of actual long-term development program and takes into account changes in Russia’s fiscal law and a possibility of carrying out a maneuver with the production volumes in order to boost sales efficiency in the first half 2017.”
Rosneft didn’t mention the recent OPEC agreement (November 30) nor the deal which it spearheaded with non-OPEC peers on December 10. According to the latter, Russia will reduce its oil production by 200,000 bpd by the end of 1Q17. As Reuters reports, this “decline will amount to 300,000 bpd thereafter from the level of 11.247 M/bpd reached last October.” Russia has met and surpassed post-Soviet oil output records every month of 2016.
Rosneft CEO Igor Sechin is a close ally of President Vladimir Putin. Over the last few years, he has emphatically insisted that Russia in general, and Rosneft in particular, could and would boost production even amid the oil price downturn. It is therefore significant that the company he heads is now claiming to be “more flexible” next year with regard to production levels, and with respect to the recent deal with OPEC.
We shall see if actions speak louder than words in this case.