June 4, 2019 / 11:48 AM / 2 months ago

UPDATE 1-Russia's Rosneft discusses govt compensation for OPEC deal extension - agencies

(Adds Sechin’s quotes, details)

MOSCOW, June 4 (Reuters) - Russian oil giant Rosneft’s CEO Igor Sechin said on Tuesday the company was discussing possible compensation from the government in the event that a global deal to cut supply is extended, Russian state news agencies TASS and RIA reported.

The Organization of the Petroleum Exporting Countries, Russia and oil exporting allies have reduced output by 1.2 million barrels per day since Jan. 1 as part of the deal.

They are due to discuss extending the agreement or adjusting its terms at a meeting in Vienna later this month, although two OPEC sources told Reuters the parties were considering moving the policy meeting to July 3-4.

Sechin, one of President Vladimir Putin’s closest allies, questioned the logic of Russia cutting output further as part of an extended deal, saying the United States could raise production and take Russia’s market share.

“Does it make sense (for Russia) to reduce (oil output) if the U.S immediately takes (our) market share?” Sechin was quoted as saying by Interfax news agency.

“We have to defend our market share,” he said.

Sechin has spoken out against the global oil deal in the past, telling Putin in a letter seen by Reuters in February it posed a strategic threat and also played into the hands of the United States.

Sechin’s new comments came as Russia’s average oil output fell sharply on June 1-3 to 10.87 million barrels per day amid an oil contamination crisis, down from an average 11.11 million bpd in May.

The fall in oil output is likely to cloud Russia’s economic performance this quarter and could even threaten to tip the economy into recession, Kirill Tremasov, an analyst at Loco-invest investment company said.

“The problems with the pipeline increase the likelihood that the economic downturn will continue also in the current quarter ...,” he wrote on social media. (Reporting by Maxim Rodionov; additional reporting by Elena Fabrichnaya; Writing by Tom Balmforth and Olesya Astakhova; Editing by Louise Heavens and David Evans)

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