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Lukoil is preparing to cut oil production by 1% in 2017 under the extension of the OPEC deal

Russia's largest private oil producer, Lukoil, expects a 1 percent drop in oil production in 2017, awaiting that stabilization of fuel prices through the extension of the OPEC + deal will negate its negative effect on the production constraint, Lukoil's First Vice-President Alexander Matytsin said at a press conference on Wednesday .

16.Jun.17 2:14 AM
By Daria Zaytseva


Lukoil is preparing to cut oil production by 1% in 2017 under the extension of the OPEC deal

"We planned about 1 percent increase in oil production, currently we assume that there will be a 1 percent decline (at Russian fields of Lukoil)," he said.

Lukoil's budget for this year, he said, is designed for an average oil price of $ 40 per barrel, the company's ten-year plan is based on an average oil price of $ 50 per barrel. Last year, Lukoil reduced oil production by 9 percent to 92 million tons, in the first quarter of this year it fell 11 percent year-on-year.

The main production area of ​​Lukoil is Western Siberia, Matytsin said that in the medium term the company plans to keep the drop in production in  this region at the level of 2 percent per year due to tax benefits. The investment program of Lukoil for this year is planned at about 550 billion rubles at the current rate.

The Russian oil-extracting business of Lukoil proved more resilient to fluctuations in oil prices, and the company significantly reduced its investments in foreign projects with the exception of Iraq and Uzbekistan, said Pavel Zhdanov, director of capital markets and M & A.

About 85 percent of the company's capital costs this year are investments in exploration and production, 70 percent of which are costs in Russia, Matytsin said.

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