Gazprom CEO Neft says he is “suspicious” of overheating oil market in 2022

Russian group Gazprom Neft has been working to increase its unused production capacity to bring additional barrels to the oil market in 2022, as the possibility of the market overheating remained, CEO Alexander Dyukov said on December 17. .

Crude prices rebounded slightly on December 16 after fears about the impact of the omicron variant of the coronavirus on global demand for oil fell by three weeks.

The dated Brent was valued by S&P Global Platts at $ 74.76 / bbl on December 16, up 2.65% on the day, but down from $ 83.125 / bbl on November 24 when the first case d omicron has been reported.

In its latest Dec. 13 report, OPEC called the impact of the omicron variant “mild and short-lived,” following the Dec. 2 decision by OPEC + countries to continue a planned increase in 400,000 b / d of production quota in January.

“In theory, there could be high volatility, but we know OPEC + could help resolve the situation. I prefer to be wary of overheating and too high a price increase, which could affect the global economy and demand, ”Dyukov told reporters during a briefing, when asked about his expectations for 2022.

There is no reason to revise OPEC + terms on omicron fears at this time, as sufficient global stocks met demand as they exceeded supply, he added.

“There should be flexibility and balance, we should review but not change decisions every week,” Dyukov said.

The price of long-term sustainable oil is expected to be lower and range between $ 50 and $ 65 per barrel, he said.

“At the moment the price is pretty stable, but in the long run it may cause producers other than OPEC + to increase their production, which can turn into overproduction and lower prices,” Dyukov said.

He expressed hope that OPEC and its Russian-led allies will continue their cooperation beyond 2022, when their current deal expires.

“Too many factors impact the oil market, uncertainties are hard to predict and sometimes the perfect storm situation makes the market rather volatile, but instruments like the OPEC + deal help stabilize the market,” Dyukov said. .

Observing the current market situation, Gazprom Neft set its 2022 budget on the basis of oil prices above the conservative $ 50 / bbl, he said.

Capacity increase

Gazprom Neft is working on expanding unused production capacity to increase oil production if the market and the OPEC + deal allow it in 2022, Dyukov said.

Previously, Deputy CEO Alexei Yankevich said the company would run out of available capacity to ramp up production by the end of 2021.

“Everything is under control and we have created a reserve of spare capacity,” said Dyukov.

“Wells are being drilled as we speak in accordance with our investment program started earlier this year, which should result in additional volumes next year,” he added.

This would allow Gazprom Neft to increase its production of liquid hydrocarbons by up to 10% in 2022.

“Based on the current understanding of the parameters of the OPEC + agreement, we see an increase of 7% for liquid hydrocarbons, 10% for total hydrocarbons,” said Dyukov.

Gazprom Neft announced on November 18 that it will meet its long-standing goal of achieving annual oil and gas production of over 100 million tonnes of oil equivalent, or around 2 million boe / d, by 2021. .
Source: Platts

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