MOSCOW (Reuters) - Russia’s largest oil producer Rosneft will be able to restore 70,000 barrels per day (bpd) of oil output in just two days if global production limits are lifted, Renaissance Capital wrote in a client note.
Rosneft accounts for about 40 percent of total oil output in Russia, which pledged to cut its output by 300,000 bpd from January 2017 as part of the global deal with the Organization of the Petroleum Exporting Countries.
The current global deal on oil output cuts is valid until the end of the year. OPEC and non-OPEC oil ministers will gather in Vienna on June 22-23 to review the agreement.
Russia and the OPEC leader Saudi Arabia have signaled there could be a need to gradually boost oil production to prevent any supply shortages.
Russian Deputy Energy Minister Pavel Sorokin told Reuters that Russia would be able to recover its oil output within a few months.
Rosneft said it has been producing oil within the quotas set by the OPEC+ deal. “That said, the company should be ready to possible changes in external environment,” a spokesman said.
Renaissance Capital analysts visited Rosneft’s new Yurubcheno-Takhomskoye oil field in Russia’s East Siberia.
“Rosneft’s management during the trip confirmed that the company’s current spare production capacity stands at 120,000-150,000 bpd (due to OPEC+ restrictions), which is ahead of our own recent estimate of 100,000 bpd,” they wrote in the note.
“According to Rosneft, it has been able to recover 70,000 bpd of oil production in just two days, with more near-term production upside likely to support its second quarter 2018 results, in our view.”
Aton brokerage, which also was on the trip, said Rosneft expected to be able to produce a further 80,000-85,000 bpd on the third day of the process, citing First Vice President Eric Liron.
“Mr Liron outlined that his company differed from other Russian oil majors in its approach to cutting production in that unlike most companies that chose to cut brownfield output, Rosneft reduced output at its mature greenfields, while continuing investments into their respective development.”
Reporting by Oksana Kobzeva and Vladimir Soldatkin; Editing by Edmund Blair and Jane Merriman