Rosneft Says It will Spend $2 Billion for Domestic Oil Purchases in 2019

Russia’s largest oil producer, state-owned Rosneft, will spend more than $2 billion to buy roughly 6 million tons of oil from domestic producers next year, Reuters reported citing an announcement on a state-owned website for purchases of companies’ needs.

According to the website, Rosneft will buy 5.14 million tons of crude oil worth 132.5 billion rubles ($1.9 billion) from another state-owned company, Gazprom Neft.

The price works out to roughly $46 per barrel, compared to a current price for Russian Urals crude blend of $51/Bbl, according to estimates. Rosneft’s total oil production is seen at 241 million tons of oil (4.82 million barrels per day) (Mmbpf) in 2019.

Rosneft has not disclosed its oil purchases for the whole 2018.

The company told Reuters the purchases will allow it to cut transportation costs and are a “usual practice in the oil industry.”

Last week, Rosneft’s CEO and Russia’s most influential energy official blamed the slump in global oil prices on a fresh interest rate hike announced by the U.S. Federal Reserve in December.

Igor Sechin, a long-standing ally of Russian President Vladimir Putin, also said he saw oil prices at $50-53 per barrel next year “under a conservative scenario.”

Oil prices have fallen by more than a third this quarter, hovering just above $50 per barrel on worries over the world economy despite a global agreement, clinched earlier this month, to cut oil production.

The Fed last week raised rates by a quarter percentage point for the fourth time this year to a range of 2.25 percent to 2.50 percent.

“This factor is the main one, which has an impact on the price (of oil),” Sechin told reporters in the Kremlin ahead of a meeting between Putin and leading Russian businessmen.