SALEKHARD, Russia (Reuters) - Gazprom Neft, the oil arm of Russian gas giant Gazprom, expects the global oil deal between OPEC and its allies to end in the first half of the year, a company official said on Tuesday.
Vadim Yakovlev, first deputy CEO of Gazprom Neft, said the global oil alliance should still remain in place, at least in the form of coordination between the world’s top global oil producers.
“In our current-year forecasts, we assume the deal will be effective until the middle of the year. In that case, our oil production will be higher by around 1.5 percent from last year,” he told reporters in the Russian Arctic town of Salekhard.
The Organization of the Petroleum Exporting Countries and other large oil producers led by Russia agreed to cut their combined oil output by 1.2 million barrels per day from Jan.1 for six months in order to support oil prices and balance the market.
The deal’s participants will meet in June in Vienna to decide on the future of the deal. Several Russian officials have hinted at the possibility of ending the cuts in June.
“As far as the deal’s extension is concerned, I think the mechanism for coordinating the actions of the participating countries should stay in place,” Yakovlev said.
Gazprom Neft is currently taking long-term investment decisions assuming an oil price of $50 per barrel, he said.
Reporting by Vladimir Soldatkin; Editing by Tom Balmforth