Russian oil capable of ‘significant’ output growth, Rosneft CEO says

VERONA, Italy (Bloomberg) -- Russia’s largest oil company said the nation is capable of a substantial increase in production, less than two weeks after President Vladimir Putin pledged his support for international efforts to limit output.

“In the future, Russia can significantly increase oil production,” Rosneft PJSC CEO Igor Sechin said Thursday. The country has capacity to add as much as 200 million metric tons a year, or 4 MMbpd, if there’s demand and technological and economic conditions allow, he said.

Russia is already pumping at a post-Soviet high, producing 11.11 MMbpd in September, according to preliminary data. Energy Minister Alexander Novak is due to meet Saudi counterpart Khalid Al-Falih this weekend as the Saudi-led Organization of Petroleum Exporting Countries works on measures to cut the global oversupply. Putin said this month that the world’s largest energy exporter is “ready to join in joint measures to limit output.”

Sechin’s outlook is a “perspective through 2045,” Rosneft’s press service said.

His comments on Russian capacity probably refer to untapped reserves such as Arctic fields and other hard-to-recover deposits like the Bazhenov formation and the Tyumen group in West Siberia, Alexander Kornilov, an analyst at Aton LLC in Moscow, said by email.

Saudi U-Turn

Oil prices remain at half their levels of mid-2014 as supply continues to swamp demand. Crude’s collapse has weighed on the finances of producing countries, with Saudi Arabia’s budget shortfall deepening to 15% of economic output last year, and Russia enduring its longest recession in two decades.

Saudi Arabia is suffering more than Russia, according to Sechin, who said the kingdom’s economic woes prompted its September decision to return to oil-market management after two years championing a pump-at-will policy.

“This is what has happened to stimulate the very recent change in the nation’s position—a switch from battling for increasing market share to a search for partners in stabilizing oil prices,” Sechin said at a conference in Verona, Italy.

Novak and Al-Falih said Oct. 11 that they would work together to strengthen the oil market after a meeting in Istanbul. Any joint accord on supply will have to wait until after OPEC’s next formal meeting in Vienna on Nov. 30.