Russian oil production might fall if global prices remain low

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Russia’s oil production might drop if global prices remain low, Tass reported Deputy Prime Minister Arkady Dvorkovich as saying.

The Energy Ministry earlier reported that oil production in the country in 2016 may remain at last year’s level of 533-534 mln tonnes.

“According to our estimates, [oil] production [may] decline amid current environment, in current system and given the proposals on tax system adjustment in the fuel and energy system, first of all introduction of tax on financial result, we may keep production at the current level,” Dvorkovich said.

But if prices remain at a low level for a long time a certain decline is possible, he said, adding that Russia’s “oil sector will adjust itself to changes in the global environment.”

Dvorkovich, however, expects the production to grow one the period of low investment in the industry is over and prices begin to rise.

According to Dvorkovich, the government can’t directly regulate crude oil production, this being the authority of oil producers, which make investment decisions within the existing regulatory and tax systems in the fuel and energy sector.

“The government has no authorities to up or cut production output within this regulatory system. Another question is that in case of low prices and higher taxes it’s clear that there are less triggers from investments, which can result in certain reduction of output,” he said.

 

 

 

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