Rosneft, Government Discussing Compensation for Possible OPEC Deal Extension: Sechin

The CEO of Rosneft, Russia’s biggest oil company, Igor Sechin, said on Tuesday the energy giant was discussing possible compensation from the government in the event that a global production cut deal is extended, reports.

As part of the deal reached late last year, the Organization of the Petroleum Exporting Countries (OPEC), Russia and oil exporting allies have reduced output by 1.2 million barrels per day since Jan. 1.

Sechin, one of President Vladimir Putin’s closest allies, questioned the logic of Russia cutting output further as part of an extended deal, saying the United States could raise production and take Russia’s market share.

“Does it make sense (for Russia) to reduce (oil output) if the U.S. immediately takes (our) market share?” Sechin was quoted as saying by Interfax news agency. “We have to defend our market share,” he said.

Sechin has spoken out against the global oil deal in the past, telling president Putin in a letter in February it posed a strategic threat and also played into the hands of the United States.

Sechin’s new comments came as Russia’s average oil output fell sharply on June 1-3 to 10.87 million barrels per day amid an oil contamination crisis, down from an average 11.11 million bpd in May.

The fall in oil output is likely to cloud Russia’s economic performance this quarter and could even threaten to tip the economy into recession, Kirill Tremasov, an analyst at Loco-invest investment company, told Reuters.

“The problems with the pipeline increase the likelihood that the economic downturn will continue also in the current quarter …,” he wrote on social media.