PRESS: Gazprom Neft to start oil production reduction in May

MOSCOW, Apr 14 (PRIME) -- Russian oil major Gazprom Neft plans to reduce oil production already in May in line with the OPEC+ deal, but does not rule out difficulties, CEO Alexander Dyukov said in an interview with Kommersant business daily released on Tuesday.

“The only difficulties will be with contractual obligations. In fact, we have already placed all volumes of oil for May on the market,” he said.

“We will set the task of reducing (oil production) in May. June is still easier. We will be able to reduce the number of spot cargo so as to meet our quota,” Dyukov said.

Oil prices may reach U.S. $40–45 per barrel by the end of 2020 in case of a favorable scenario with coronavirus, he said.

“We assume that the second quarter will be the most difficult, but we hope that the removal of quarantines and the restoration of business activity will begin in summer, and in autumn, oil demand can reach a level close to the pre-crisis one. In this optimistic scenario, by the end of the year, the price could reach $40–45 per barrel, with further growth in 2021,” Dyukov said.

The market situation will force the company to reduce its investment program, he also said.

“But we do not expect a reduction in the physical volume of investment activity by more than 20%. It is important that the company entered the crisis in a stable financial condition. We have low debt, a significant part in rubles. A number of investment projects are not in the active phase, which adds flexibility in making decisions,” he said.

Dyukov also said that OPEC+ should target growth of demand for oil, but not reserves.

“As I’ve already said, we need a stable market, and for a long time we see that the price level around $50 per barrel is stable. And the right market regulation strategy for OPEC+ is to target the share of demand. That is, simplified, OPEC+ should choose for itself some part of the increase in demand, say, 50% – when there is a growth in demand,” he said.

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