Rosneft CEO asks Putin for government support due to the ‘dramatic state’ of the oil market

Russian energy giant “Rosneft” is reducing its investment program to 750 billion rubles (approximately $10.3 billion) in 2020, which is 200 billion rubles less than it was in 2019. This was reported by Rosneft CEO Igor Sechin during an in-person meeting with President Vladimir Putin on May 12 (a transcript of the meeting is available on the Kremlin’s website). 

According to Sechin, the decision to reduce the investment program’s costs was made “taking into account the dramatic state of the global oil market as a whole,” and in connection with the decision to reduce global oil production. 

“The main thing for us, where we urgently need the government’s help, is softening the banking policies related to the availability of credit,” Sechin said. “If it were possible to increase the limits on creditors, it would help support our investment program greatly.”

Sechin also asked about the possibility of “transferring tax payments” for upcoming prospecting works.

“I understand these concerns, we will definitely discuss this,” Putin responded, according to the Kremlin’s transcript.

Global oil prices collapsed in March 2020 due to decreased demand in the context of the coronavirus pandemic, as well as Russia’s decision to quit the OPEC+ deal. In April, the value of Brent crude fell below $18 per barrel for the first time since 2001.

OPEC later reached an agreement with non-member countries, including Russia, to cut back global oil production by 9.7 million barrels per day in May and June. For Russia, this means reducing oil production by 2.5 million barrels per day.