Sechin proposed to reduce production of oil in Russia

Rosneft proposes to consider reducing production in Russia to balance the global market, reported Reuters citing two sources in the industry. Know about it and sources close to two oil companies.

After meeting with the leaders of the eight largest oil companies (Rosneft, LUKOIL, “Surgutneftegaz”, “Gazprom oil”, etc.) on Tuesday, President Vladimir Putin said that they all agree to freeze production at the level of January 2016. Of the measure in order to reduce the excess oil on the market, Russian energy Minister Alexander Novak agreed with his counterparts from Saudi Arabia, Qatar and Venezuela in mid-February. Oil production in Russia in January amounted to approximately 10.9 million barrels. a day, in February it decreased slightly — by 0.2%, to 10,885 million barrels. (data from CDU TEK).

During the meeting with the oilers on Tuesday, Putin said that there are more “radical” proposals than freezing production. Are you talking about the idea of not freezing, but to reduce production, said a source close to the meeting. According to him, this proposal by the President the meeting was addressed Sechin. In addition, the head of “Rosneft” suggested to reallocate quota among exporting companies (in proportion to production), but it was not supported by other oil companies, he added .

This is not the first sentence of “Rosneft” to reduce production, says a source close to one of its competitors. The state-owned companies own falling oil production, such offers are a good way to score political points, he suggests. Rosneft offers to reduce production, because it expects natural decline of its own production this year,” writes Reuters, citing two sources in the industry.

According to the Ministry of energy, mining Rosneft last year decreased by about 1%, although the industry was an increase of 1.4%, to 534 million tons In January 2016, the production of state-owned companies compared with the same period last year fell by 1% to 15,98 million t in February production of “Rosneft” amounted to 14,96 million tonnes.

The representative of the state company Mikhail Leontyev refused to comment.

On the eve of Putin meeting the interlocutors told me that most companies favour not to cut production is in danger of losing market share and the previously invested funds.

Reuters sources say that the possible reduction of extraction “Rosneft” will be offset by increasing production from other Russian companies. In February 2016 production increased “Gazprom Neft”, “Bashneft” and “Tatneft”.