OAO Rosneft, Russia's biggest oil producer, plans to expand into Africa and Europe and increase output by 70% in 13 years, Chief Executive Sergei Bogdanchikov said, adding he is confident it will be able to refinance and repay some debt without selling equity.
Mr. Bogdanchikov said in an interview at the World Petroleum Congress in Madrid that record oil prices are driven mainly by higher demand and a lack of investment caused in part by a wave of mergers and acquisitions.
Crude settled at $140 a barrel in New York Monday. Global neglect of power-saving measures, which were successful in driving down oil prices in the 1980s, is also a factor, he said.
On the supply side, Mr. Bogdanchikov said Russian oil production, which has slipped recently, will pick up and Rosneft will play a role in that.
Under a strategic development program, state-owned Rosneft aims to expand production to 160 million metric tons of oil, or about 3.2 million barrels a day, in 2015 and to 170 million tons in 2020, up from 100 million tons last year, Mr. Bogdanchikov said.
The CEO said production will grow organically from current fields in Russia and abroad.
The program, based on the average price of Urals crude of $65 to $80 a barrel, hasn't yet been adopted by the company's board, Mr. Bogdanchikov said.
Russia remains Rosneft's main production base, though the company is planning to expand its onshore and offshore projects in Kazakhstan.
Mr. Bogdanchikov also said Rosneft has production plans in Africa, but he declined to specify which country. Rosneft already has upstream projects in Algeria, but has said it plans to add another country to its African portfolio.
Rosneft is considering downstream projects in Eastern Europe and Europe in general, Mr. Bogdanchikov said. But he said the company isn't currently able to find either a partner for a joint venture or a project to buy that would ensure a desired profit margin of 20%.
"We don't want to buy anything abroad just to ensure a presence," he said.
Referring to the recent shareholders conflict in Russo-British oil company TNK-BP, half-owned by BP PLC, Mr. Bogdanchikov said: "We have no interests in TNK-BP assets," adding that Rosneft "doesn't plan to have anything to do" with the dispute.
In recent weeks, tensions between BP and its Russian billionaire partners in the joint Russian oil and gas venture have escalated into a full-fledged dispute.
Mr. Bogdanchikov welcomed the Russian government's recent tax incentives, aimed at boosting oil production in the country. But he said he wants to wait until the oil-tax changes are adopted in their final version before passing judgment on whether the changes are enough to increase crude production.
He said that Russia's oil-production drop of 1% last year was temporary and will be reversed when the tax regime is relaxed. "Production will definitely catch up," he said.
Turning to the company's debt, the CEO said Rosneft doesn't plan to sell its equity or remortgage its shares to finance its debt. "I'm absolutely sure that we'll successfully partly refinance (and) partly pay off the part of the debt due in September this year," he said.
In April, Rosneft's debt stood at $23.6 billion, of which $13.8 billion was short term. By September the company has to refinance debt valued at $8.6 billion.
Mr. Bogdanchikov added he doesn't see the government's involvement in the company as excessive. "We are happy with our relationship with the state," he said.