Lukoil wants Opec+ kept forever; it’s got some convincing to do


The logo of Lukoil is seen in West Qurna oilfield in Iraq’s southern province of Basra on March 29, 2014.

Russia’s No 2 oil company said the Opec+ alliance of producers should stick together for good, voicing an opinion at odds with some of its domestic competitors. “Opec+ should be kept forever, that’s my opinion,” Lukoil PJSC chief executive officer Vagit Alekperov said at a shareholder meeting on Thursday. The vote of confidence in the group comes less than two weeks before it’s due to meet in Vienna to thrash out production policy, with a rollover of cuts widely expected. “We’ve been supporting the Opec+ agreement since its first days, and today I support it as well,” Alekperov said, adding that regulated volumes could be changed.

Co-operation with the Organisation of Petroleum Exporting Countries has not always been an easy sell to Russian crude producers, which can be resilient to price declines as the flexible rouble exchange rate and tax system provide a natural hedge for their costs. Igor Sechin, the boss of No 1 producer Rosneft PJSC, has long opposed output coordination with Opec and said this month that an extension of cuts would lead to a loss of market share to the US. “The future of the Opec+ deal remains unclear,” Alekperov said on Thursday at the meeting in Moscow. “Even between Russian companies, there is no single position on whether it’s rational to participate in the agreement.” Opec and its allies, including Russia, are set to gather on July 1-2 in the Austrian capital to discuss extending the curbs that have helped buoy oil prices this year. Crude won’t drop below $40 a barrel in the “mid-term” – thanks in part to Opec+ – and won’t rise above $80, according to Alekperov.

Sources and photo-credits: Bloomberg, Gulf Times