Rus­sia starts grad­ual oil out­put cuts as OPEC+ deal kicks in

Tehran Times - - ENERGY -

Rus­sia is grad­u­ally re­duc­ing oil pro­duc­tion in line with the OPEC+ deal and is on track to get about a fifth of the way to­ward its pledged cut this month.

Pre­lim­i­nary data show the na­tion’s out­put has al­ready fallen by more than

30,000 bar­rels a day rel­a­tive to Oc­to­ber lev­els, En­ergy Min­is­ter Alexan­der Novak said Fri­day. “The com­pa­nies have said they can de­crease to­tal pro­duc­tion by 50,000 bar­rels per day in Jan­uary,” he told re­porters in Moscow.

Rus­sia has agreed with the Or­ga­ni­za­tion of Petroleum Ex­port­ing Coun­tries to grad­u­ally im­ple­ment a cut of 228,000 bar­rels a day by the end of the first quar­ter, com­pared with Oc­to­ber pro­duc­tion of

11.418 mil­lion bar­rels a day. The coun­try opened the taps be­fore the re­stric­tions be­gan, pump­ing a post-Soviet record of

11.45 mil­lion bar­rels a day in De­cem­ber, mean­ing the month-to-month out­put drop will be steeper.

In the OPEC+ ac­cord, Rus­sia was al­lowed to make the cuts grad­u­ally since the harsh cli­mate and com­plex ge­ol­ogy of Siberia, its main oil prov­ince, pre­vent swift field shut­downs. In con­trast, Saudi Ara­bia said it has al­ready fully im­ple­mented its pro­duc­tion cut and even gone a lit­tle deeper, pump­ing 10.2 mil­lion bar­rels a day.

Rus­sia’s re­duc­tions are mod­est com­pared with the cuts from some of its part­ners. In De­cem­ber -- be­fore the agree­ment to cur­tail supplies even started -- OPEC pro­duc­tion plunged by 530,000 bar­rels a day, the most in al­most two years. The OPEC+ al­liance agreed to trim out­put by a to­tal 1.2 mil­lion bar­rels a day in the first half of 2019.

While the curbs have helped push bench­mark Brent crude back above $60 a bar­rel, prices re­main about 30 per­cent below their four-year high in early Oc­to­ber.

The next meet­ing of the Joint Min­is­te­rial Mon­i­tor­ing Com­mit­tee, which over­sees im­ple­men­ta­tion of the pro­duc­tion cuts, may take place in April, al­though that date could change, Novak said.

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