6 May 2020 18:18

Gazprom Neft's output profitable even at $20/bbl, company looking at scenarios of $15-$40/bbl - CFO

MOSCOW. May 6 (Interfax) - Gazprom Neft's production is profitable even if the price of oil remains at $20 per barrel, and the company is looking at price scenarios of $15-$40 per barrel, Gazprom Neft CFO Alexey Yankevich told the company's Siberian Oil corporate magazine

"By the time that the crisis began, Gazprom Neft had reached a very good financial situation: We have low debt, a large part of which is in rubles, as well as good figures of production efficiency; therefore, we feel quite stable. Even if the price level stays in the region of $20 per barrel, production will remain profitable for us," Yankevich said.

"Today, Gazprom Neft works in accordance with Strategy 2030, which envisages modularity when forming the investment portfolio and flexibility in decision making. This approach turned out to be extremely timely, and we see today that thanks to this, we can quickly respond to the changing market situation. We have adopted a flexible budgeting system in our company. We are considering several scenarios from $15 to $40 per barrel. This allows us to adjust costs while maintaining production efficiency. Naturally, we will monitor the situation and take additional measures to ensure financial stability," the CFO said.

"Basically, all of our projects are long-term. At the same time, the majority of forecasts show that oil should return to $50 or higher in the long term, which corresponds to our base price when evaluating investment projects. In addition, we have always tested our projects at rather low prices; therefore, most of them will retain a return on investment. We are now testing our entire program to take into account the impact of today's prices. Accordingly, certain adjustments are possible, but there is no talk of a major revision of the investment program. We assume that the physical volume of investment activity will not be reduced more than 20%," Yankevich said.