OPEC is desperate for Moscow’s cooperation as it looks ahead to production cuts at its semiannual meeting next month, but while Putin seems open to the idea of coordinating efforts with the cartel, the head of the country’s largest state-owned oil company is sending an entirely different message. Rosneft is responsible for some 40 percent of Russian oil production, and its CEO, Igor Sechin, thinks that Russia can add production in the coming years. Bloomberg reports:
“In the future, Russia can significantly increase oil production,” Rosneft PJSC Chief Executive Officer Igor Sechin said Thursday. The country has capacity to add as much as 200 million metric tons a year, or 4 million barrels a day, if there’s demand and technological and economic conditions allow, he said.
Russia is already pumping at a post-Soviet high, producing 11.11 million barrels a day in September, according to preliminary data. Energy Minister Alexander Novak is due to meet Saudi counterpart Khalid Al-Falih this weekend as the Saudi-led Organization of Petroleum Exporting Countries works on measures to cut the global oversupply. Putin said this month that the world’s largest energy exporter is “ready to join in joint measures to limit output.”
Sechin’s claim—that Russian oil output could rise another 4 million barrels per day (the country currently produces just over 11.1 million barrels per day)—ought to raise eyebrows. Not too long ago, Rosneft’s holdings were looking iffy as the company was running the proverbial red queen’s race, working harder and harder just to keep output at a constant level as mature fields began to dry up. With Moscow’s oil numbers already sitting at a post-Soviet high, it’s a little difficult to see where Sechin’s claimed 36+ percent jump is going to come from.
The political dynamics are murky as well: Putin just last week said that “Russia is ready to join the joint measures to cap production and is calling for other oil exporters to join.” And Sechin isn’t the only one sending a mixed message on cooperating with OPEC: Alexander Novak, the Russian energy minister, has repeatedly played down expectations for the Kremlin joining in on a so-called OPEC “freeze” plan over the past few months. However muddled these waters are, we can be sure of one thing: that Russia will act to sell as much oil as it can at the highest price it can fetch. We’ll have to wait and see if that involves going into cahoots with the petrostate cartel.