Rus­sia says OPEC+ out­put cuts can’t last for­ever

Muscat Daily - - BUSINESS -

Moscow, Rus­sia - OPEC+ out­put cuts have sta­bilised the global oil mar­ket but can’t last for­ever, Rus­sia said as un­cer­tainty per­sists over the fu­ture of the agree­ment be­yond March.

‘Oil-pro­duc­tion cuts can’t be eter­nal; we will grad­u­ally need to make a de­ci­sion on ex­it­ing’ the ac­cord, Rus­sian En­ergy Min­is­ter Alexan­der No­vak said in an in­ter­view with state tele­vi­sion chan­nel Ros­siya24.

As one of the ar­chi­tects of the OPEC+ deal, Rus­sia’s view is key, though the na­tion’s oil pro­duc­ers have long pushed for a re­lax­ation of out­put curbs.

Rus­sia needs to de­fend its mar­ket share and let its oil com­pa­nies de­velop new pro­jects, No­vak said. The min­is­ter didn’t spec­ify when the coun­try may de­cide to with­draw from the agree­ment, but said he ex­pects to dis­cuss the mat­ter with his OPEC+ coun­ter­parts next year. Global oil de­mand may surge as soon as next sum­mer, he said.

Rus­sia, which helped to ce­ment the orig­i­nal deal be­tween OPEC and its part­ners back in 2016, has shown this year that it’s get­ting weary of lim­it­ing sup­ply. The na­tion has con­sis­tently failed to com­ply with its quota, over­shoot­ing its tar­get for eight months so far in 2019, ac­cord­ing to Bloomberg cal­cu­la­tions based on of­fi­cial sta­tis­tics.

That trend has con­tin­ued in De­cem­ber, with Rus­sia pump­ing 11.252mn bar­rels a day so far this month, about 62,000 a day above tar­get, ac­cord­ing to of­fi­cial data seen by Bloomberg.

In a re­vi­sion to the deal in early De­cem­ber, Rus­sia and its OPEC+ part­ners agreed to deepen their curbs in the first quar­ter of 2020 to 1.7mn bar­rels a day. Rus­sia is set to en­large its cuts by 70,000 bar­rels a day to about 300,000 a day.

Nev­er­the­less, the na­tion re­quested that con­den­sate be ex­cluded from its tar­get. No­vak has de­nied that the change is a loop­hole al­low­ing Rus­sia to pump more oil and claim com­pli­ance.

While Rus­sia’s of­fi­cial sta­tis­tics don’t pro­vide a break­down for crude and con­den­sate, the En­ergy Min­istry will reg­u­larly in­form an­a­lysts, the me­dia and OPEC about the com­po­si­tion of its out­put, No­vak said.

OPEC+ will meet in early March to dis­cuss op­tions for fu­ture co­op­er­a­tion on sup­ply.

Rus­sian En­ergy Min­is­ter Alexan­der No­vak

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