Russia’s Lukoil ready to limit oil production by closing old wells

BRUSSELS, Nov 8 (PRIME) -- Oil major Lukoil is ready to limit oil production in line with a Russian government decision by suspending old oil wells in Western Siberia, Vice President Leonid Fedun told reporters on Tuesday.

“We are ready for the cut, if there is a ruling of the government…As I see it, the issue is not about a cut, but about a freeze. But what will be chosen as a freezing point – the level of the middle of the year or end of the year? This is yet to be discussed,” he said.

“The efficiency of new fields is very high. The cost of production at these fields is two times lower than the cost of production at brown fields in Western Siberia, so it is simply a matter of economic efficiency. We should close old wells with low efficiency, and we have, let’s say, 20% of wells that provide about 1% of our output. And suspension of such a well increases economic efficiency of the company.”

OPEC agreed to limit daily oil output at 32.5–33.0 million barrels at an informal meeting in Algeria in September. The ceilings for each country will be defined at the meeting on November 30 in Vienna. President Vladimir Putin said earlier that Russia is ready to join OPEC in a freeze of oil production, if an agreement is reached.

Lukoil does not plan to leave Bashneft-Polyus, a joint venture with oil company Bashneft, which develops the Trebs and Titov oil fields in which Lukoil owns 25.1%.

“No, we are not thinking about that. We have an agreement on that joint venture, and the agreement is in force,” he said.

Proven reserves of the Trebs and Titov fields amounted to 240.2 million barrels of oil as of December 31, 2015.

End