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Lukoil CEO expects oil price of $60 per barrel in 2018

December 13, 2016, 14:38 UTC+3 MOSCOW

Lukoil’s investment program for 2017 is based on $40 per barrel

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MOSCOW, December 13. /TASS/. Russia’s oil major Lukoil expects the oil price to be within the $40-50 per barrel range in 2017 and around $60 in 2018, CEO Vagit Alekperov said in an interview aired by the Rossiya-24 TV news channel on Tuesday.

"I think that (in 2017 - TASS) between 40 and 50 dollars (per barrel), most probably slightly higher than 50 dollars per barrel, and already 60 dollars in 2018," he said.

According to Alekperov, the company "can manage $20 and even $15 per barrel oil price" thanks to the reduction of investment programs," which is not positive though and will mean "a sharp drop in production output and as a result a sharp drop in volumes of oil extraction."

The company’s investment program for 2017 is based on $40 per barrel, CEO said. "We assume the oil (price) will not drop below $30 (per barrel)," he added.

Earlier Alekperov said that Lukoil planned to budget $40 per barrel oil price for 2017, $50 for 2018, and $60 for 2019.

He also said that the 2016 budget approved by the board of directors was based on the oil price of $50 per barrel. He added that the company also had a stress scenario with the oil price of $40 per barrel.

As was reported earlier, in 2015 Lukoil increased oil production (both in Russia and abroad) by 3.6% to 100.7 mln tonnes. In 2017, the company plans to keep production at 86,088 mln tonnes. In January-September 2016, Lukoil’s oil output decreased by 7.9% year-on-year to 69.301 mln tonnes.

Reduction of oil output

Lukoil is ready for reduction of oil production in Russia to the level required by the agreement of OPEC and non-OEPC countries, Alekperov said.

"We are ready to freeze production at the required level. We will prepare new fields, we need to have potential, but we can adjust the volume of production at our traditional fields," he said.

Head of the company Vagit Alekperov said earlier that Lukoil is ready to join Russia’s decision to fulfill commitments to reduce oil production. "The agreement at the OPEC summit is a natural reaction of producers to the situation. Lukoil supports the position of the Energy Ministry and ready to join Russia’s decision," he said.

The company’s Vice President Leonid Fedun said that Lukoil expects that the Russian government will pay compensation to major oil companies due to reduction of oil production.

"We still expect that there should be a special regulatory document, a government decree, which will assign tasks for each oil producer, maybe some compensatory measures. Since freezing of oil production requires certain costs, we dare to hope there will be some kind of compensation for companies," he said in an interview with Rossiya 24 TV channel.

On November 30, OPEC countries agreed to cut oil production to 32.5 mln barrels per day, which means those countries will reduce their daily average output by 1.164 mln barrels starting January 1, 2017. Now OPEC will have to make a similar deal with non-OPEC members. The cartel expects them to cut crude production by 600,000 barrels per day in 2017, including a reduction of 300,000 barrels per day by Russia.


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