Lukoil Not Seeking Compensation for Crude Output Cuts

Russia's second-largest crude producer Lukoil has not asked for any additional compensation in return for curbing production in line with the extension of the OPEC and non-OPEC production cut deal, CEO Vagit Alekperov said on Friday.

"We are discussing legislation governing the oil industry in Russia overall, but we are not separately discussing any compensation on the production cut," he was quoted as saying by Platts.

Ahead of the OPEC/non-OPEC meeting on Thursday, some analysts questioned whether Russian companies would continue to support the output cut deal.

Although it has benefited producers by boosting prices, the longer the agreement is in place, the greater the risk that they may be forced to postpone the launch of greenfield projects in order to meet their obligations.

"Subsoil resources in Russia belong to the state and decisions taken by the ministry are obligatory for us. Today we are discussing the issues, and of course the market has to be balanced, stocks are high and the ministry's decision is aimed at stabilizing the oil market," Alekperov said.

He added that the structure of implementation of the deal in Russia, where the cuts were shared out across companies proportionally, will not change.

On Thursday Lukoil officials said they will continue their strategy of balancing out higher output at greenfield sites with lower production at mature fields in West Siberia and Timano-Pechora to meet their obligations under the OPEC/non-OPEC deal.

Alekperov said that, when the agreement is lifted, the company can bring additional production volumes back on stream quickly.

Lukoil is also in talks with Iran to participate in two major onshore oilfield development projects—Abteymour and Mansouri—as well as wider investments in the country, according to Iran's Oil Minister Bijan Namdar Zanganeh

"They told us that they are going to be joined with Maersk. We asked them to send a letter to us. The two companies are due to give us their proposals," Zanganeh said following a meeting in Vienna, Austria, on Friday. It will join Denmark's Maersk for the developments.

"We discussed ways to develop [Iran's] oil industry with Lukoil to use their resources, management and technology in our fields and also trade," he said.

The talks also involve expansion of crude and products trading.