Lukoil is confident the market will experience oil shortage by the year-end, Vice President of the Russian oil major Leonid Fedun said on Tuesday.
“The market is recovering at large, investments decline, and the whole range of companies already left the market. Fields are leaving the market. No doubts there will be deficit by the year-end,” Fedun said.
Doha meeting participants failing to reach the production freeze agreement were probably afraid of the possible dramatic price bouncing, Fedun said. “A number of companies is in a very complicated situation, 0.5 mln bbl of production are at risk. Such a bounce will provide banks with an opportunity to continue financing bad debtors,” he said.
At the same time, the political factor is the main factor that cannot be forecasted, Fedun said. “Complications in relations between Iran and Saudi Arabia defy any economic analysis,” he added.
Lukoil to keep oil production in Russia at last year level
According to the top official, Lukoil will keep oil production in Russia at the last year level in 2016 and growth may take place in 2017.
“Lukoil’s [oil production] will be approximately at the current level in 2016. Growth related to launch of two fields will be in 2017,” Fedun said.
Company’s global production will decline this year, Fedun added. “A contraction will take place globally in 2016 because of declining compensating production in Iraq,” Fedun said.
Lukoil is currently negotiating optimization of contract terms with the Iraqi oil ministry, Fedun said. “It turns to be fairly burdensome under low oil price. We would like to improve contract terms,” he added.
Lukoil produced 2.4 barrels of oil equivalent daily in 2015, up 2.8% year-on-year.
Lukoil sets $40/bbl oil price in Q2 budget
Lukoil’s budget for the second quarter of 2016 is based on the oil price of $40 per barrel.
“40 [dollars per barrel] in the second quarter,” Fedun said.
Lukoil’s budget for 2016 is based on the oil price of $50 a barrel, company’s president Vagit Alekperov said earlier. The company also has the stress scenario with the oil price of $40 per barrel.
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