Russian energy firms may cut investments

MOSCOW, Oct. 22 (UPI) -- Russian banking major VTB said the oil producers in the country may have to pull back on their planned investments if world crude prices continue to decline.

An analysis by VTB said if crude were to drop below $47 per barrel on the New York Mercantile Exchange, given the "current level of market pessimism," future investments may be cut, The Moscow Times reported.

The report said refining units in the country are profitable only if prices stay around $60 per barrel, though production units are profitable even if the price drops to $15 per barrel.

The VTB analysis said oil firms Gazprom Neft and TNK-BP were most vulnerable to the declining market as their profits drop around 22 percent for every $10 decline in crude prices.

Crude was moving toward $67 per barrel on the New York Mercantile Exchange Wednesday, down from July highs of more than $147 per barrel.

Meanwhile, natural gas exports would no longer generate a profit if crude fell below $30 per barrel. While gas exports are linked to oil, there is a six-month lag time in terms of pricing, meaning natural gas firms like Gazprom will remain profitable for the time being.