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Gazprom Neft unhappy with OPEC-Russia production cut deal

Gazprom Neft is holding its nose to the OPEC/non-OPEC production cut deal because it has made the company cut its production growth targets.

Gazprom Neft unhappy with OPEC-Russia production cut deal

Russia’s oil producer Gazprom Neft is «holding its nose» to the OPEC/non-OPEC production cut deal because it has made the company cut its production growth targets, Gazprom Neft’s 1st deputy CEO Vadim Yakovlev told Reuters in an interview published on October 16, 2017.

«The companies involved in this deal are paying a different price. The effect is equal for everyone, but the contribution of the companies to the deal is different,» Yakovlev said.

«This is related to the market players’ ability to increase their output - we have such a possibility and have to ‘hold our noses’. Gazprom Neft makes a big contribution to the deal. For us, this is a very sensitive issue as it is holding up the development of our fields,» said the manager who noted that the company sees the deal as a short-term one.

In June this year, Gazprom Neft CEO Alexander Dyukov said in an interview published on Gazprom Neft’s website:

«Gazprom Neft, as you know, has, in recent years, aggressively expanded production - by 7 to 9 % per year - and, of course, we had planned to continue growing at that same rapid pace. Following the OPEC agreement, instead of growing at 8 to 9%, we have increased production by just 4.5 to 5 %. Which is, without a doubt, a negative factor for us.»

Gazprom Neft plans to lift its oil production next year, Yakovlev told Reuters in interview. For the 1st half of this year, the company reported a 23.1% annual increase in net income, while oil and gas production, including such from joint ventures, rose 5.3% year-on-year, driven by production ramp-up at the new Novoportovskoye, Prirazlomnoye, and Messoyakha fields, as well as in Iraq.

Gazprom Neft’s Middle East operations are of «strategic importance», noted Vadim Yakovlev, adding that the company plans to increase its presence there.

At the Badra field in Iraq, production is expected at between 85,000 bpd and 90,000 bpd in 2018, to reach 110,000 bpd in the future.

Iraq has not asked Gazprom Neft to cut production in the country, said Yakovlev. At the end of March, Gazprom Neft’s production at Badra was 80,000 bpd, with further developments planned.

In Iran, Gazprom Neft has filed plans to develop 2 oil fields— Changouleh and Cheshmeh Khosh.

Author: Tsvetana Paraskova

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