Sechin Says Rosneft to Cut Spending 10 Percent After Oil Slump

OAO Rosneft, Russia’s largest oil producer, will cut spending 10 percent this year after oil prices slumped.

“For the past year and a half we have cut spending by 10 percent annually, and this year this tendency will continue,” Rosneft Chief Executive Officer Igor Sechin told Russian President Vladimir Putin outside Moscow.

The company has set its plans for this year based on an average oil price of $50 a barrel, Sechin said.

Russia’s largest oil and gas producers, Rosneft and OAO Lukoil, have both cut spending plans after oil prices halved over the past six months. The price squeeze has hit Rosneft particularly hard as it seeks to repay debts raised for the $55 billion acquisition of TNK-BP in 2013.

Rosneft was able to maintain oil and gas output growth even as it cut spending, Sechin said. Hydrocarbons output grew 4.6 percent to 252 million tons of oil equivalent in 2014, Sechin said. Rosneft produced 205 million tons of oil and almost 60 billion cubic meters of gas, he said.

The company increased its number of oil rigs to 213 from 81 and plans to increase the number of in-house drilling crews to 230 this year from 51 in 2013, Sechin said.

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