PRESS: Lukoil CEO says OPEC+ alliance created forever

MOSCOW, Sep 7 (PRIME) -- The OPEC+ alliance has been created forever, not for a short period time, its regulation can change depending on the situation, Russian oil company Lukoil’s CEO Vagit Alekperov said in an interview with Kommersant business daily, released on Tuesday.

“I think that the OPEC+ alliance has been created not for a short period of time, but forever. But its regulation can vary depending on the situation,” he said.

Alekperov added that the current parameters of the oil output reduction agreement are set until the end of 2022 and hoped they will not change until the date.

Lukoil has reduced production to 90,000 barrels per day and hopes to recover production after the agreement expires, he added.

“We have a potential. The company has effective reserves. The decision to increase drilling in Russia will guarantee not only stabilization, but also growth of the output by around 1.5–2% beyond 2022,” he said.

The OPEC+ countries agreed to reduce their oil output by 9.7 million barrels per day in May 2020 to fight the consequences of the global coronavirus pandemic, with Russia’s share of 2.5 million barrels per day. The cut was narrowed to 7.7 million barrels per day for August–December 2020, and then to 5.8 million barrels per day.

Alekperov said that oil prices of above U.S. $100 per barrel can stimulate investment in low marginal projects and result in “a market collapse.”

“I would not like to see oil prices of over $100 per barrel again, because they can stimulate investment in low-margin and low-effective projects and then lead to what we have already experienced, a collapse of the market,” he said.

The CEO also said that he does not plan to rename Lukoil although it produces not only oil.

There are no reason for further growth of the tax burden in the Russian oil industry so no new taxes are expected in 2021, and Lukoil is negotiating benefits for development of high viscous and super viscous oil deposits with the government, Alekperov said.

“We are in a permanent dialogue with the government, but have found no decision yet… I hope that in the future we will find a solution for such deposits, because they should be effective at a price of U.S. $50–55 per barrel of oil,” he said.

Lukoil is also in talks with the government over transit of the Korchagin deposit to the excess profit tax, he added.

Alekperov said that the government’s damping mechanism to restrain fuel price growth should be additionally adjusted, because it becomes less effective at high oil prices.

He also said that Lukoil is in talks with gas giant Gazprom on purchases of Lukoil’s gas produced on the Yamal Peninsula, and is ready to launch commercial production at its deposits in the region at the end of 2023 if the gas price continues to rise.

The two companies are also negotiating purchases of gas, produced by Lukoil at the Khvalysnky field, located at the Caspian Sea at the border between Russian and Kazakhstan, to sell it to Europe and China.

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