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UPDATE 2-Rosneft does not rule out global oil output cuts extended beyond 2018
December 18, 2017 / 5:27 PM / a month ago

UPDATE 2-Rosneft does not rule out global oil output cuts extended beyond 2018

(Adds details of new strategy)

By Olesya Astakhova

SOCHI, Russia, Dec 18 (Reuters) - A global deal to cut oil production could be extended beyond 2018, Pavel Fedorov, first vice-president of Russia’s largest oil producer Rosneft said on Monday, presenting the company’s strategy through to 2022.

The Organization of the Petroleum Exporting Countries and other large oil producers led by Russia agreed last month to extend the deal to curb output until the end of 2018 with a possibility of reviewing it in June.

“On the whole ... this OPEC agreement obviously will affect our short-term targets, all the more so I don’t rule out it could be extended,” Fedorov said.

The new strategy announced in the Black Sea resort of Sochi, not far from the place Rosneft started drilling its first exploration off shore well, envisages that Rosneft will focus on value creation at its existing assets, a company official said on Monday

According to the company’s official, the new strategy will add as much as 420 billion roubles to the free cash flow, including 180 billion from upstream segment.

The new financial plan is based on average oil price of $47 per barrel.

Fedorov said that production of liquids, which usually means crude oil and gas condensate, was seen reaching 250 million tonnes by 2022 from slightly below that level in 2019.

Rosneft, in which BP owns a 19.75 percent stake, has been actively amassing assets at home and abroad.

Last year it bought Russian oil producer Bashneft for 330 billion roubles ($5.6 billion), while earlier this year the company jointly with partners closed their $12.9 billion purchase of Indian refiner Essar Oil.

Igor Sechin, Chief Executive Officer and close ally of Russian President Vladimir Putin, said on Monday the company had started exploration drilling at a Black Sea deposit.

Rosneft has plans to jointly develop the Val Shatskogo (Shatsky Ridge) oilfield with Italy’s Eni.

Fedorov also said the company’s total investments were seen at 950 billion roubles ($16.2 billion) in 2018 and rising further to over 1 trillion roubles in 2019, not taking into account Rosneft’s stakes in its joint ventures

$1 = 58.5900 roubles Reporting by Olesya Astakhova; writing by Vladimir Soldatkin/Denis Pinchuk, editing by David Evans

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