(Reuters) – Russia’s largest private oil producer Lukoil expects the country’s output to drop for the first time in many years in 2016, as firms reduce drilling in response to low oil prices.
Lukoil’s chief executive Vagit Alekperov said on Wednesday that production from Russia, the world’s largest producer, could decline by 2-3 percent and possibly more if the government raises taxes, a move Moscow is considering.
“Today, the oil industry is near a survival line… Unfortunately we are cutting drilling,” he told Reuters Television on the sidelines of the World Economic Forum, adding that Lukoil’s own output could drop by the same amount.
Alekperov said he saw oil prices hovering around $30 per barrel in the first quarter of 2016, gradually recovering to an average of $50 per barrel for the year as a whole.
He said it was still not clear if it was legally possible to buy Iranian oil for European refineries following the removal of sanctions over the weekend.
And it would take 5 to 7 years for Iran to boost output significantly and then only if it put the right legislation in place to compete for investments.
“All of Iran’s oil producing equipment needs to be modernized, its oil fields require investment… Unfortunately, Iran has not come up with the legislation yet… They need to make a competitive offer,” he said.
(Editing by Alexander Smith)
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