Gazprom Neft Ready to Increase Oil Production

Gazprom Neft, the fastest-growing Russian oil major in terms of output, is ready to hike crude production if the global deal on output cuts is eased, the company's chief, Alexander Dyukov, told reporters on Saturday.

The Organization of Petroleum Exporting Countries and other leading oil producers, including Russia, have agreed to cut their combined output by 1.8 million barrels per day in order to smooth out global oil stockpiles and support oil prices, Reuters reported.

The OPEC and non-OPEC ministers will meet in Vienna on June 22-23 to discuss the future of the deal, which is valid until the end of the year.

Russia and OPEC leader Saudi Arabia have signaled there could be a need to gradually boost production to prevent any supply shortages.

“It is obvious now that the production quotas should be revised. The quotas should be increased; this will be beneficial both for producers and consumers,” Dyukov said after an annual general meeting.

He added that the company would be able to hike its oil production by 5,000 tons per day (36,650 barrels per day) if the restrictions are scrapped.

“We believe that the time has come that it makes sense to keep the deal in place but be more flexible on quotas,” Dyukov said.

He also said that if the deal is kept in place, Gazprom Neft’s oil production will be stable, at 62.3 million tons (1.25 million bpd) this year.

According to analysts, Russia’s largest oil producer Rosneft will be able to restore 70,000 bpd of output in just two days if global production limits are lifted.

Russia’s oil production increased to 11.1 bpd in the first week of June, far exceeding production limits outlined in a global oil deal, Interfax news agency cited a source as saying on Saturday.

The country agreed to cut its production by 300,000 bpd from 11.24 million bpd as part of a global pact. The Russian Energy Ministry did not immediately respond to a request for comment.

Interfax said Russian oil production stood on average at 1.51 million tons per day in the first week of the month and never got below 1.51 million tons.

Most Russian oil majors have supported the increase in oil production, as prices have reached $80 per barrel last month. Currently, Brent is trading at more than $76 per barrel.

Russian President Vladimir Putin has said a price of $60 “suits” his country.

Russian oil output was stagnant at 10.97 million bpd for a third month in a row in May.