Russian oil company LUKOIL will not buy new assets while oil prices are below $65 per barrel, and expects its production to rise next year, a top executive and shareholder told a newspaper.
“There will be no purchases with oil prices at $65-$45 per barrel. At $80 we have positive cash flow of $2 billion. But we will have to redeem existing obligations from those $2 billion,” LUKOIL's vice-president Leonid Fedun told Vedomosti.
Fedun, with 9% in LUKOIL, is the third largest shareholder in Russia's No.2 producer after US major ConocoPhillips and LUKOIL's president Vagit Alekperov.
Fedun told the newspaper he wouldn't comment on reports that LUKOIL is seeking to buy up to 30% in Spain's energy major Repsol.
He also said he expected the firm's production to rise next year, mainly due to the launch of LUKOIL's joint project with Conoco on the Arctic in 2008.
“Next year, it will give such a boost that our overall production will rise,” he said.
“Next year we are also launching the Korchagin field - this is a top priority project, and our Caspian program is not changing in general. We will also go forward with our foreign projects because we have obligations.”
Projects that might be suspended are those with high production costs, mainly in West Siberia, he said.
“Production in 2010 could fall because of lower capex and may decline to the levels of 2008 under a negative scenario. But I hope we will find common language with OPEC and the price of oil will be predictable,” he said.
He said Russia needs a price of oil of $25 to sustain production in West Siberia and a price of $90 to launch new fields in East Siberia, the Caspian and the Arctic. (Reuters)