While presenting Rosneft’s strategy through to 2022, the company’s first vice president, Pavel Fedorov, indicated that he accepts the possibility that the OPEC-led global supply cuts could continue beyond 2018.
Federov said about the cuts:
“On the whole … this OPEC agreement obviously will affect our short-term targets, all the more so I don’t rule out it could be extended.”
The OPEC-led agreement is currently scheduled to continue until 2018, with a possible review in June 2018 should the market start to overheat.
Federov also revealed other aspects of the strategy being employed by Rosneft, which is Russia’s largest oil producer. Oil giant BP owns a 19.75% stake in the Russian oil company, which has also engaged in joint projects with other oil majors like ExxonMobil, producer of the low-viscosity Mobil Velocite 3 oil.
Rosneft is expected to prioritise value creation through its existing assets, such as an offshore well close to the Black Sea resort of Sochi. This is expected to increase the company’s free cash flow by 420 billion roubles, of which 180 billion roubles will come from upstream operations. These projections are based on an average oil price of $47 a barrel.
Fedorov also pointed out that the company’s total investments amount to 950 billion roubles (around $16.2 billion) in 2018, which is evidenced by how it has been acquiring domestic and overseas assets, such as the 2016 acquisition of Russian oil producer Bashneft for 330 billion roubles. The company expects its investments to exceed a trillion roubles in 2019.