Azernews.Az

By Bloomberg

OAO Rosneft plans to keep oil and gas output steady from 2015 to 2017, focusing on mature fields as sanctions shut down its advance into the Arctic offshore.

Production will be 252 million metric tons of oil equivalent this year, or about 5.1 million barrels a day, little changed from 2014, according to a presentation to shareholders by Chief Executive Officer Igor Sechin Wednesday in St. Petersburg, Russia.

State-run Rosneft and other Russian energy producers boosted output to near a post-Soviet record in May even after oil prices fell by more than 40 percent in the last year and the U.S. and European Union imposed sanctions that impede international borrowing and bar exports of used to tap unconventional oil reserves. Lower prices are expected to begin affecting U.S. production in the second half, the Energy Information Administration said last week.

“Rosneft’s current business model allows us to maintain stability even amid an adverse external environment,” Sechin said. “The company will implement an investment program that targets output at mature fields.”

Rosneft, the world’s biggest publicly traded oil producer by volume, plans to boost drilling by 7 percent to 10 percent a year while reducing costs by relying on in-house services, he said.

Russian oil output has continued to grow despite U.S. and European sanctions against the industry imposed last year over Russia’s role in the conflict in Ukraine.

The sanctions haven’t eroded Russian production because it relies mainly on conventional resources, according to BP Plc’s chief economist Spencer Dale. Russian oil taxes have also provided a cushion for producers, he said.

“The Russian fiscal regime is exemplary on how to insulate oil companies from oil price volatility,” Dale said Wednesday at presentation in Moscow. “Even as oil prices fall companies have the resources to continue to produce.”

BP owns a 19.75 percent stake in Rosneft.

In 2014, Rosneft produced 4.2 million barrels a day of crude and condensate and the equivalent of 937,000 barrels a day of natural gas. The company expects to boost gas output 7 percent this year.