Lukoil’s CEO Vagit Alekperov: OPEC has no Future Energy
Lukoil’s CEO Vagit Alekperov: OPEC has no Future
In the aftermath of the Doha fiasco and rumors that another meeting could take place in May, one Russian executive could have effectively erased any last hope of oil exporters reaching an understanding.
Vagit Alekperov, the 65-year-old CEO of Lukoil, is casting shadows of doubt that his country will reach an agreement to freeze output with members of OPEC after Saudi Arabia turned its back on April 17.
Prior to the meeting at Doha, Russian Energy Minister Alexander Novak stated that a preliminary agreement to freeze production has been reach with Saudi Arabia. The world’s two largest oil producers seeing eye to eye would have had other participants jumping on board without a second thought.
“Whatever happens now, there’s very little chance of Russia ever agreeing to restrain output,” said Mr. Alekperov during his interview with CNN last week.
Lukoil is Russia’s second largest oil producer, after Rosneft, and is claiming to be responsible for around 2% of the world’s total output. According to Mr. Alekperov, his company, as well as other Russian producers, has already adjusted to low oil prices and is able to earn enough money for shareholders and to invest.
The CEO contradicted the Kremlin’s statement that Russia could further ramp up its oil production following the failed Doha meeting. He said that most of Russia’s oil fields are mature and new fields are needed to quickly increase production. Considering that such new fields would have to be established in regions such as the Arctic, Russia’s Far East, and the deep waters of the Caspian Sea, this would require immense spending.
If Russia were to lower its production, along with the countries that are already doing so, this could effectively dry out the oversupply even amid the Gulf nations increasing their production.
Vagit Alekperov anticipates oil prices to reach $50 per barrel by around the end of 2016, early 2017.
“What we’re seeing today indicates that we’re coming to a period of stability of prices and a trend towards higher oil prices,” he said.
Today, Mr. Alekperov also stated that OPEC isn’t able to perform its function due to internal political differences.
“OPEC needs to be reformed. It must develop new instruments in order to coordinate the actions (of its members) with each other,” he said. “The means of the organization have been exhausted.”
Oil prices started this trading week on a bearish note, partially due to a report that Saudi Arabia could expand production of its Shaybah oilfield from 750,000 to 1 million barrels a day, fueling renewed concerns over the global supply glut.
As the US bourses closed at 4:00 pm, oil benchmark futures were trading lower, with WTI and Brent at $42.86 and $44.63 per barrel, respectively.