Rosneft PJSC CEO Igor Sechin said intermittent cuts in Russia’s oil production are holding back the development of the country’s biggest crude producer.
“Rosneft has been limiting crude oil production in one way or another since 2017, which prevents the company from fully releasing its potential,” Sechin said in a statement on Wednesday after the release of the company’s operating results. The CEO is one of Russia’s most powerful businessmen and a close ally of President Vladimir Putin.
Still, Rosneft is committed to the current production cuts, implemented as part of Russia’s cooperation with OPEC. The oil giant cut its liquids production in the second quarter by 2.2% to 3.9 million barrels per day, compared with the previous three months, the statement said.
Sechin also said that Russia’s tax environment “including already enacted legislative changes and new initiatives, makes the company’s operations more difficult.” The country’s producers have seen a series of legal changes since Russia’s invasion of Ukraine, from introducing a minimum price for Urals crude for tax purposes to halving subsidies to refining, all aimed at increasing the oil and gas revenues of the Russian budget.
Since Russia began working with the Organization of the Petroleum Exporting Countries in 2017, Sechin has consistently criticized the cooperation. Instead, Rosneft’s chief executive has pushed for the country to increase crude output and defend its market share from other global producers, including the US.
More recently, at the International Economic Forum in St. Petersburg, Sechin noted that it is increasingly difficult for OPEC to reach a consensus because of the different economic structures and divergent production trends in member states.
Russia pledged to cut its crude output from March 2023 and hold it until 2024 in a move to stabilize global oil markets. The nation also pledged to cut its oil exports by 500,000 barrels a day in August and by 300,000 barrels a day in September from an unspecified baseline.
Saudi Arabia, OPEC’s de facto leader, has made its own voluntary production cuts of 1 million barrels per day “to bolster precautionary efforts by OPEC+ countries to support to the stability and balance of oil markets”.
