SUMMARY: Russian Oil Companies Not Frightened of Lower Oil Prices
- JRL 2012-118
Russian oil companies put their budgets together last year, when oil traded at more than $100. Yet they still feel comfortable, and do not intend to review those budgets, putting their faith in $90, the price they sees as the benchmark.
ROSNEFT FOCUSED
Rosneft will need to adjust its budget if the oil price falls below $90 per barrel, the Russian state-owned oil company's President Igor Sechin said last week.
"Rosneft's budget is based on a price of no less than $90 per barrel. If it's lower than that, we will need to adjust it," he said.
The global oil and gas sector has been operating in conditions of volatility over the past few years. "If there is a significant price drop, investment programs will suffer, but we don't expect any dramatic forecasts," Sechin said.
LUKOIL CONFIDENT
The head of Lukoil, Vagit Alekperov, does not foresee a sharp decrease in oil prices and expects prices to come around $100-$110 per barrel in 2013.
"We all have forecast that prices will come to $100 but the price has slipped under $95. But I am completely convinced that the economy will not let the oil price go under $90 because of the costs incurred by oil companies for production, especially at complex fields," he said last week.
Alekperov believes that an oil price range at $95-$110 per barrel would be "objective, which suits oil producing countries, oil companies and consumers." "I think there will not be a sharp fall in price. If this happens, it will be for the short-term," he added.
According to his forecasts, the oil price next year should come to $100-$110 per barrel because the budgets of many countries are based on this price range.
TNK-BP FLEXIBLE
TNK-BP has not yet changed its 2012 business plan due to falling oil prices and changes in market conditions, the company's CFO Jonathan Muir told journalists after the company's AGM on June 28.
"Right now I can't say that market conditions have somehow influenced us. We haven't yet changed our business plan for 2012. We intend to implement all of our key projects, despite the rather sharp change in oil prices," he said.
TNK-BP conducts a sufficiently in-depth policy in terms of putting together and executing its business plan. It hedges its risks and focuses on always generating positive cash flows, Muir said.
TNK-BP uses an oil price of $90 per barrel as its base scenario, $110/barrel as an optimistic scenario, and $75/barrel as a pessimistic scenario, he said.
SURGUTNEFTEGAS ATTENTIVE
Surgutneftegas is not yet planning to revise its budget for 2012 due to falling oil prices, the company's chief Vladimir Bogdanov told journalists after the AGM on June 29.
However, he did not rule out subsequent actions, noting that "after that, we will see what happens."
At the AGM, Bogdanov said that the oil price might fall to $50 per barrel, according to several experts' estimates.
GAZPROM NEFT STABLE
Gazprom Neft chief Alexander Dyukov said at the beginning of June that he did not yet see any grounds or reviewing the 2012 budget due to falling oil prices. "The price for oil is declining but it is now quite far from the lower limit on which Gazprom Neft's budget has been developed. Therefore, we don't see any reasons for revising this year's budget and reviewing strategic parameters," he said.
"We have a high level of stability. We will get through the problems of the current recession. The recession isn't forever and prices for oil will increase in the long-term. Our projects have been developed at a lower limit of $90 per barrel and we are confident about this price," Dyukov said.
TATNEFT MOBILE
Tatneft is not planning on revising its business plan for 2012, which was developed assuming an oil price of $100 per barrel and a ruble to dollar exchange rate of 28.7 rubles/$1, the company's General Director Shafagat Takhautdinov told journalists in Almetyevsk on June 29.
"We won't revise it. We are considering various scenarios: if it will be as written (in the forecast), if it will be lower by $5, $10 and $15 (per barrel), and if it will be higher. Based on that, we will look at how the company does. In that sense, we are mobile," he said.
BASHNEFT CALM
Bashneft so far sees no need to adjust its 2012 budget for lower oil prices, the company's first vice president for exploration and production, Mikhail Stavsky, told reporters.
"In today's environment we do not so far see any need to review the budget. We are satisfied (with current oil prices) and the plans we have already adopted for 2012 are still interesting," he said.
Keywords: Russia, Oil, Gas, Energy - Russian News - Russia
Russian oil companies put their budgets together last year, when oil traded at more than $100. Yet they still feel comfortable, and do not intend to review those budgets, putting their faith in $90, the price they sees as the benchmark.
ROSNEFT FOCUSED
Rosneft will need to adjust its budget if the oil price falls below $90 per barrel, the Russian state-owned oil company's President Igor Sechin said last week.
"Rosneft's budget is based on a price of no less than $90 per barrel. If it's lower than that, we will need to adjust it," he said.
The global oil and gas sector has been operating in conditions of volatility over the past few years. "If there is a significant price drop, investment programs will suffer, but we don't expect any dramatic forecasts," Sechin said.
LUKOIL CONFIDENT
The head of Lukoil, Vagit Alekperov, does not foresee a sharp decrease in oil prices and expects prices to come around $100-$110 per barrel in 2013.
"We all have forecast that prices will come to $100 but the price has slipped under $95. But I am completely convinced that the economy will not let the oil price go under $90 because of the costs incurred by oil companies for production, especially at complex fields," he said last week.
Alekperov believes that an oil price range at $95-$110 per barrel would be "objective, which suits oil producing countries, oil companies and consumers." "I think there will not be a sharp fall in price. If this happens, it will be for the short-term," he added.
According to his forecasts, the oil price next year should come to $100-$110 per barrel because the budgets of many countries are based on this price range.
TNK-BP FLEXIBLE
TNK-BP has not yet changed its 2012 business plan due to falling oil prices and changes in market conditions, the company's CFO Jonathan Muir told journalists after the company's AGM on June 28.
"Right now I can't say that market conditions have somehow influenced us. We haven't yet changed our business plan for 2012. We intend to implement all of our key projects, despite the rather sharp change in oil prices," he said.
TNK-BP conducts a sufficiently in-depth policy in terms of putting together and executing its business plan. It hedges its risks and focuses on always generating positive cash flows, Muir said.
TNK-BP uses an oil price of $90 per barrel as its base scenario, $110/barrel as an optimistic scenario, and $75/barrel as a pessimistic scenario, he said.
SURGUTNEFTEGAS ATTENTIVE
Surgutneftegas is not yet planning to revise its budget for 2012 due to falling oil prices, the company's chief Vladimir Bogdanov told journalists after the AGM on June 29.
However, he did not rule out subsequent actions, noting that "after that, we will see what happens."
At the AGM, Bogdanov said that the oil price might fall to $50 per barrel, according to several experts' estimates.
GAZPROM NEFT STABLE
Gazprom Neft chief Alexander Dyukov said at the beginning of June that he did not yet see any grounds or reviewing the 2012 budget due to falling oil prices. "The price for oil is declining but it is now quite far from the lower limit on which Gazprom Neft's budget has been developed. Therefore, we don't see any reasons for revising this year's budget and reviewing strategic parameters," he said.
"We have a high level of stability. We will get through the problems of the current recession. The recession isn't forever and prices for oil will increase in the long-term. Our projects have been developed at a lower limit of $90 per barrel and we are confident about this price," Dyukov said.
TATNEFT MOBILE
Tatneft is not planning on revising its business plan for 2012, which was developed assuming an oil price of $100 per barrel and a ruble to dollar exchange rate of 28.7 rubles/$1, the company's General Director Shafagat Takhautdinov told journalists in Almetyevsk on June 29.
"We won't revise it. We are considering various scenarios: if it will be as written (in the forecast), if it will be lower by $5, $10 and $15 (per barrel), and if it will be higher. Based on that, we will look at how the company does. In that sense, we are mobile," he said.
BASHNEFT CALM
Bashneft so far sees no need to adjust its 2012 budget for lower oil prices, the company's first vice president for exploration and production, Mikhail Stavsky, told reporters.
"In today's environment we do not so far see any need to review the budget. We are satisfied (with current oil prices) and the plans we have already adopted for 2012 are still interesting," he said.