Russia may see a natural decline in oil output by around 1 million barrels per day (bpd) at most but has no plans to cut production in coordination with OPEC, Deputy Prime Minister Arkady Dvorkovich said.
Russia is the world’s biggest oil producer and output hit a post-Soviet high at an average 10.58 million bpd last year, but Western sanctions over Ukraine and low prices pose a threat to the development of what is the country’s key source of revenue.
Biggest risk for Russia comes from a weakening in domestic demand.
Dvorkovich ruled out the cut in tandem with OPEC despite oil prices sinking to five-year lows. OPEC, an oil producing group of which Moscow is not a member, decided to keep output levels stable last year.
“If the oil (price) stays at $50 for a long time, of course some projects will become less attractive and a small output decline may start. But we will not cut production on purpose,” Dvorkovich told Reuters.
“We could lose at maximum a 10th of output but more likely 300,000-400,000 bpd. There are no grounds for a bigger decline,” he said on the sidelines of the World Economic Forum in Davos.
Dvorkovich also said that Russia could balance its budget at any oil price, which he expected to stay low for a long time.
Dvorkovich said the biggest risk from lower oil prices and sanctions was a weakening in domestic demand. The rouble has lost half of its value against the dollar since last year.
