/OIL: Lukoil Vice President Proposes Cutting Russian Oil Output By 20-30% Amid Sanctions

Russia needs to adjust its oil industry to the changing environment as the current crisis creates problems but also opportunities for future development, Lukoil Vice President Leonid Fedun argues in an op-ed for RBC. His piece sheds some light on the thinking of industry leaders in Russia as Western sanctions over Russia's attack on Ukraine bite.

• Fedun notes that Russia should consider the possible implementation of an EU embargo on Russian oil and adjust to crisis conditions, while maintaining agreements with OPEC+ partners.
• "Why produce and export more goods than is necessary for dynamic economic growth and current prosperity? (...) in my opinion, it is more rational to save unextracted reserves of raw materials for future consumption and create infrastructural reserves than to accumulate doubtful debt obligations," Fedun writes.
• "Therefore, why should Russia produce 10 million barrels of oil per day, if we can effectively consume and export 7-8 million without losses for the state budget, domestic consumption and imports? (...) Should we try to maintain pre-crisis export volumes by agreeing to 30% and sometimes even 40% discounts?"
• "At the same time, buyers, under the talk of an oil embargo, will try to institutionalize these discounts with the help of tariff regulation tools. In the face of a political storm, it is extremely important to keep the OPEC + agreement. Only Arab producers have free capacities capable of partially replacing Russian oil exports in the short term."