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Gazprom Neft says OPEC+ should decide on coronavirus response later

Gazprom Neft CEO Alexander Dyukov said Wednesday the OPEC+ group of oil producers should respond to the impact of the coronavirus outbreak but decide on quotas later on.

“Of course, it will probably be necessary to react, but I think that it would be more appropriate to respond to the situation a bit later on because at the moment there is a lot of uncertainty and a lot of conflicting information,” Dyukov said in an interview with the Russia 24 TV channel.

Russia has yet to state an official position on making any changes to the current OPEC+ agreement. The group will meet March 5-6 in Vienna to discuss market conditions and the future of the deal. Saudi Arabia has lobbied to deepen the 1.7 million b/d production cut to offset the coronavirus outbreak’s impact on demand, but Russian officials have yet to commit to any changes.

Dyukov added that while the situation was deteriorating in countries such as South Korea and Italy, data from China indicates they have managed to slow down the pace of the spread of the epidemic.

“But in any case, not so much time has passed…something happens every month on the oil market and if OPEC+ reacts to changes every month this will only lead to destabilization of the situation. Therefore it’s better to observe and probably decide on quotas a little later,” he said.

In mid-February representatives of Russian oil companies indicated that they supported an extension of the OPEC + production cuts through to the end of the second quarter, but at current production levels rather than with any deeper cuts.

Russian producers are splitting the country’s 300,000 b/d cut quota proportionally, but have repeatedly expressed concerns about the impact of complying with the deal on their longer-term development plans and market share.

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Output dependent on OPEC+

Dyukov added that the company has the capacity to increase its hydrocarbons output to 100 million mt, or around 2 million b/d of oil equivalent in 2020, but actual production would depend on OPEC+ quotas.

“We are close to the strategic goal that we set ourselves 10 years ago, namely to double hydrocarbons production volumes, to bring them up to 100 million mt of oil equivalent. We have developed capacity to production 100 million mt this year, but a lot of course depends on what will happen with the OPEC+ deal,” Dyukov said.

On Tuesday Gazprom Neft reported that its hydrocarbons production rose by 3.2% on the year in 2019 to average 1.95 million boe/d. The company attributed this growth to rising output at Novoportovskoye and East Messoyakha.
Source: Platts

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