Russian energy firm Lukoil estimates that oil prices will average out at $50 per barrel, with $40 as a worst-case scenario, a top executive at the company, Leonid Fedun, said in an interview with business daily Kommersant
MOSCOW (Pakistan Point News / Sputnik - 24th November, 2020) Russian energy firm Lukoil estimates that oil prices will average out at $50 per barrel, with $40 as a worst-case scenario, a top executive at the company, Leonid Fedun, said in an interview with business daily Kommersant.
"We estimate that the worst-case scenario is $40, but objectively the price of $50 per barrel is reasonable," Fedun said, answering a question on how Lukoil is calculating its output amid pandemic-related turbulence.
Fedun, who serves as vice president for strategic development at Lukoil and owns a sizeable chunk of its shares, went on to say that government taxation of energy firms has reached its peak and any more taxation schemes would come at the expense of innovation and profitability.
The executive also said that Lukoil's production volumes are likely to remain steady in the future as all its investments remain profitable even in the worst-case scenario.
"Lukoil will maintain production at the current level through 2035 since all our brownfield projects [investment in existing facilities] and a significant part of greenfield projects [investments in new projects] remain profitable even at a price of $40 per barrel, the cut-off point for all new projects," Fedun told Kommersant.
In this regard, Lukoil's outlook mainly focuses on medium-sized projects, as constructing large rigs and oil refineries is becoming less feasible due to the improvements in plastic recycling technology, which Fedun believes will decrease annual oil supplies by three to five million barrels.