Russia-OPEC Deal Extension Hastens Decline of Oil Heartlands

1 Jun 2017   -, Russia

Output at higher-taxed West Siberian fields is dropping Rosneft, Lukoil pursuing projects with higher-margin barrels Russia’s deal with OPEC has bolstered state coffers by putting a floor under crude prices, but it’s also had one unintended consequence: depressing output in the nation’s West Siberian oil heartlands. With the Kremlin offering lower tax rates for new projects in the Caspian and East Siberia, Rosneft PJSC, Lukoil PJSC and other producers have looked elsewhere for the cuts that will allow Russia to comply with 300,000 barrels-a-day of production curbs. That means the Soviet-era fields of West Siberia. “West Siberian output is the first to go under knife,” said Alexander Kornilov, an oil analyst at Aton. “These are the least profitable barrels.” Since Russia joined forces with the Organization of Petroleum Exporting Countries, futures have rebounded from last year’s lows and the exporters have been able to earn more while pumping less. […]

Tags:

Comments are closed.