Russia may see a natural decline in oil output by around 1 million barrels per day (bpd) at most but has no plans to cut production in coordination with OPEC, Deputy Prime Minister Arkady Dvorkovich said on Wednesday.
Russia is the world's biggest oil producer and output hit a post-Soviet high at an average 10.58 million bpd last year, but Western sanctions over Ukraine and low prices pose a threat to the development of what is the country's key source of revenue.
Dvorkovich ruled out the cut in tandem with OPEC despite oil prices sinking to five-year lows. OPEC, an oil producing group of which Moscow is not a member, decided to keep output levels stable last year.
"If the oil (price) stays at $50 for a long time, of course some projects will become less attractive and a small output decline may start. But we will not cut production on purpose," Dvorkovich told Reuters. "We could lose at maximum a 10th of output but more likely 300,000-400,000 bpd. There are no grounds for a bigger decline," he said on the sidelines of the World Economic Forum in Davos.
Dvorkovich also said that Russia could balance its budget at any oil price, which he expected to stay low for a long time.There are so many "holes" in this story.
I love this bravado: "... Russia could balance its budget at any oil price..." LOL.
Total Will Also Cut
Reuters via Rigzone is reporting:
French oil and gas company Total will cut spending on ageing North Sea fields and on U.S. shale production after the recent plunge in oil prices.
Speaking at a panel session at the World Economic Forum in Davos, Switzerland, Patrick Pouyanne said he expected oil prices to remain low in the first half of 2015 after falling almost 60 percent since June to below $50 a barrel.
Pouyanne told the Financial Times on Tuesday that Total planned to reduce capital spending by 10 percent this year from 2014's $26 billion and was also looking at imposing a hiring freeze for 2015. Total's spending in the North Sea, home to the benchmark Brent crude oil, will be reduced as profitability from fields there has worsened, Pouyanne said on Wednesday.
A Total spokeswoman later said that the group's UK unit will reduce contractor costs by 10 percent in 2015 and this will translate into an unspecified cut in contracted staff in the region. U.S. shale oil and gas production, which has surged in recent years, causing a large build in global oil supplies, will also be curtailed. "We have fields on the U.S. East Coast and my instructions have been pretty clear -- we will limit investments," Pouyanne told the panel. "I can come back in one year when prices come back."More at the link.
Oh, Man, Oh, Man
Reuters at Rigzone also reporting:
Oman oil minister Mohammad bin Hamad al-Rumhy sharply criticised OPEC's production policy on Wednesday, saying it was creating volatility in the market without benefiting oil producers and that his country was suffering.
In November, OPEC decided to keep its output unchanged despite sliding prices. Analysts believe the policy is being engineered by Saudi Arabia and other top Gulf producers to protect their market share against higher-cost suppliers outside OPEC, such as U.S. shale oil producers.
Oman is a significant oil producer but it lacks the huge oil and financial reserves of its Gulf neighbours, and it is not an OPEC member.