Russia's Rosneft cuts investment by 21% over weak oil prices, output deal

FILE PHOTO: Chief Executive of Rosneft company Igor Sechin attends a meeting with Russian President Vladimir Putin in Moscow, Russia February 11, 2020. Sputnik/Alexei Druzhinin/Kremlin via REUTERS .

MOSCOW (Reuters) - Igor Sechin, the head of Russia’s energy giant Rosneft, told President Vladimir Putin on Tuesday the company would cut investment by around 200 billion roubles ($2.7 billion), or 21%, this year due to the global output deal.

Brent crude prices fell 65.6% in the first quarter, before the group of oil producers known as OPEC+, agreed to cut oil supply by a record 9.7 million barrel per day from May to help shore up prices and curb oversupply.

“Taking into account, so to say, the dramatic conditions of the global oil market on the whole and due to the decision on the production cuts, we, of course, will have to optimize part of the capital expenditures,” Sechin told Putin at a meeting in the Kremlin, according to details published by the Kremlin.

Investments will be cut from 950 billion roubles in 2019, Sechin, a close ally of Putin, said.

Sechin also asked Putin to postpone taxes for geological exploration and align oil transportation tariffs with current oil prices.

Global oil and gas companies have been cutting their investments this year due to the economic fallout from the spread of the coronavirus and a slump in energy prices.

Sechin also asked Putin to ensure a softer banking policy in terms of accessibility of loans and working capital, adding that in two to three years the crisis will be over.

Reporting by Vladimir Soldatkin, editing by Louise Heavens and David Evans