Gazprom Neft sees technical synergies with Abu Dhabi's gas programme

Exclusive: Russia's third-largest oil producer sees prices averaging $50 per barrel

Gazprom Neft deputy chief executive Vadim Yakovlev anticipates "short-term deviations" but expects Opec+ to make an effort to maintain fairly conservative prices. Victor Besa/The National

Gazprom Neft, the oil and gas exploration arm of Russian gas company Gazprom, expects oil prices to average $50 per barrel. The company also sees possible opportunities in sharing its technical expertise in developing the UAE's gas reserves, its deputy chief executive said.

"When we are talking about our strategical plans and our long term goals, we are pretty conservative, and we are considering the long term price is $50 [per barrel]," Vadim Yakovlev told The National in an interview.

"If $50 per barrel is going to remain $50 per barrel, our portfolio is going to remain sustainable," he said.

Opec+, the supergroup of oil producers behind a historic supply restriction pact headed by Saudi Arabia and Russia, "is providing a stable situation in the market," he said.

"And I don't think that country members of the agreement are interested in prices growing further."

The group is looking to bring 2 million barrels per day back to the market by the end of this year. The alliance will meet on October 1 to consider whether to bring 400,000 bpd back to the market for the month. The group of exporters is optimistic about global oil demand, expecting consumption to hit 100.8 million barrels per day in 2022.

Mr Yakovlev anticipates "short-term deviations" from their expected price levels but expects the group to make an effort to maintain fairly conservative prices.

"Members of the agreements already demonstrated many times that they can get themselves quickly and act on this good way to stabilise the situation," he said.

Longer term, he expects oil prices to be swayed by investment decisions made by global policymakers.

On Tuesday, Opec secretary general Mohammed Barkindo said crude oil prices are being affected by a "transition premium" amid the switch to renewables, in addition to the fundamentals of global supply and demand.

Mr Barkindo's comments follow a call by the International Energy Agency to halt all fossil fuel investments and limit sales of internal combustion engine passenger cars to achieve global net-zero targets by 2050.

Gas prices have also surged 96 per cent year-to-date amid concerns the rapid decarbonisation of global energy systems will leave millions facing energy poverty due to higher energy prices.

"Constraints imposed on producers will make investment challenging, and it may result in certain premiums or risks," Mr Yakovlev said.

"The world needs energy in growing volumes."

In Abu Dhabi, Gazprom Neft is looking for opportunities to bring its expertise in "low permeable" gas reservoirs, as the emirate looks to unlock significant unconventional gas reserves.

In 2019, Abu Dhabi National Oil Company announced the discovery of additional reserves of 7 billion "stock tank" barrels of oil, 58 trillion cubic feet (tcf) of conventional gas and 160 tcf of unconventional gas. This pushed the UAE up the rankings in terms of hydrocarbon reserves, data from the US Energy Information Administration showed. Last year, the UAE also announced discovery of 80 tcf of shallow gas reserves in an area between Abu Dhabi and Dubai – the biggest discovery in 15 years.

"We have gained significant expertise in the area of working with a low permeability gas. So we are open to sharing experience," Mr Yakovlev said.

In Western Siberia, where Gazprom Neft is part of a joint venture to develop fields with Mubadala and the Russian Direct Investment Fund, the company plans to double the size of its current reserves.

"The current level of production is 45,000 bpd. And there is potential to increase the reserves base of this asset. Once you've found them. It's not a big task. It's quite an ordinary task to develop them to produce," he said.