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Russia's oil giant Rosneft promises to make investments amid weak oil prices

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(Credit: Mikhail Voskresenskiy/Host Photo Agency/Ria Novosti via Getty Images) UFA, RUSSIA - JULY 8: In this handout image supplied by Host Photo Agency / RIA Novosti, President and Chairman of the Board of JSC Rosneft Igor Sechin at a briefing on signing a long-term contract for oil deliveries between Rosneft and Essar oil LTD during the BRICS/SCO Summits - Russia 2015 on July 08, 2015 in Ufa, Bashkortostan, Russia.BRICS/SCO Summits - Russia 2015
March 30
6:54 AM 2016

Rosneft, the Russia-based oil firm, has promised to make investments of roughly EUR 13 billion annually through 2018, which is an increase of 30% for the year 2016. The energy firm's determination comes amid the sluggish oil economy across the globe.

According to Igor Sechin, chief executive officer of Rosneft, the company is managing to sustain the instability in the oil market. He vowed President Vladimir Putin that the firm will honour the rules under the output deal through this investment program as reported by Euronews.

However, few analysts were anxious regarding the fall in production as a result of the maturing oil fields in Western Siberia that generates over half of the country's oil supply. The company is planning to enhance its drilling activities at Yuganskneftegaz, which is considered to be the biggest producing unit of the company. The company noted that its hydrocarbon production grew by 1% to 254 million tonnes in 2015.

Meanwhile, Sergei Donskoi, minister of natural resources in Russia, said that the energy giant is set to reduce oil production in an effort to back up poor energy prices. Russia along with other major oil producers like Venezuela, Qatar and Saudi Arabia has agreed to freeze oil production to ramp up oil prices from a historical low in January.

OPEC members and other producers have decided to gather in Doha to discuss freezing oil output. Donskoi told Reuters that energy companies in Russia had reformed their output policies with regard to the output freezing. But, Rosneft did not comment on its output plans. Rosneft, which produces nearly 3.8 million barrels a day, accounts for over one-third of Russia's net 10.88 million bpd.

In early March, the company supported the idea of lowering domestic production to offset the world market, sources close to the industry said. In 2014, Rosneft halted drilling activities in the Arctic region following the withdrawal of ExxonMobil from the Kara Sea project due to sanctions levied on Moscow. Donskoi pointed out that Lukoil yet to decide on adjusting its production plans to support global oil market.

Janet Yellen, chairman of Federal Reserve, said that further drop in oil prices will hurt the rest of the economy across the globe. Yellen noted that the slump in oil prices over the recent period will burden the global growth in all respects. She added that poor oil prices could enhance spending in the US for the following few years, however, oil producers will probably limit government expenditure, leading to more job cuts in the oil sector, as reported by Fuelfix.

Rosneft investment policy comes amid the struggling oil environment, which pushes energy stocks down from their record high in the past. However, energy firms are still hopeful regarding the prospect of their financial condition.

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