Despite production cuts mandated by the so-called OPEC+ deal between major oil producers, Russia’s Lukoil has managed to increase its output by 2% from January through September 2019, the company’s head Vagit Alekperov told Kommersant in an interview.
The result comes mainly thanks to the foreign projects that the company is actively developing, Alekperov told the business newspaper.
“The company’s economic indices are also quite positive,” Alekperov added.
“From January through September 2019, Lukoil’s financial performance indicator (EBITDA) grew by 15 percent, the interim dividends that the shareholders approved on December 3 are almost twofold more than last year,” the head of the company added.
Alekperov also stressed that by the end of the year, EBITDA is likely to be no lower than in 2018 while the oil production growth is forecasted at the level of at least one percent even taking into account the current restrictions for the next three years.
Russia’s second-largest oil producer this month outlined three different scenarios for Russia’s opportunities and challenges in oil production in the long term, in its report ‘Major Trends in the Global Liquid Hydrocarbon Market to 2035’.
The ‘Equal Opportunities’ scenario considers that global oil and gas demand will rise and Russia can maintain an annual production level of above 600 million tons—or over 12 million bpd—for a long time, Lukoil said.
The ‘Evolution’ scenario assumes a change in Russia’s current tax system to a system based on taxation of profits instead of taxation of revenue and the Western sanctions on Russia’s oil industry remaining in place for a long time. Under this scenario, Lukoil expects Russia’s crude oil and condensate production to gradually fall to just over 10 million bpd by 2035.
Currently, Russia pumps around 11.2 million bpd of oil and condensate.
The ‘Climate’ scenario assumes that oil demand is expected to decline due to stricter climate policies in leading economies, including Russia. This model forecasts that Russia’s oil and condensate production will slump to below 8 million bpd by 2035.
“This scenario also assumes that the taxation of the oil industry is going to become more burdensome through CO2 emission fees, which will adversely impact investment into oil production,” Lukoil said.