Page 81 - RusRPTMar20
P. 81
9.1.1b Oil and gas sector news
The Wall Street Journal reported on February 21 that Saudi Arabia is considering breaking its four-year oil production alliance with Russia after Moscow refused to emergency coronavirus production cuts. Earlier in February, Saudi Arabia proposed that OPEC+ remove an additional 600,000 barrels per day from the market to offset the negative effects of the virus on demand. Russia shot down the proposal, as no major Russian oil company supported extra cuts. The Saudis are now reportedly in talks with Kuwait and the UAE about cutting output by as much as 300,000 barrels per day, threatening the continued survival of OPEC+. Together, Saudi Arabia, Kuwait, and the UAE account for over half of OPEC’s production capacity.
Ukraine’s gas company Naftogaz seeks a new $8bn in compensation from Gazprom. Naftogaz and six of its subsidiaries submitted their Reply Memorial on Quantum in the Permanent Court of Arbitration proceedings against the Russian Federation, responding to Russia’s Counter-Memorial on Quantum. In its Reply Memorial, Naftogaz further substantiates its claim for compensation for its assets that the Russian Federation unlawfully expropriated in Crimea in March 2014 – damages valued at approximately $8bn, including interest. Earlier, the Tribunal found that the Russian Federation had breached a number of BIT provisions by the expropriation of Naftogaz group’s assets in Crimea. Despite Russia’s appearance in the arbitration in January 2017, it refused to actively participate in the proceedings for nearly three years. Thereafter, Russia submitted its Counter-Memorial in December 2019, but did not put forward any alternative measure of damages.
The OPEC+ Technical Committee has recommended cutting the production quota 600kbbl/d until June at a meeting in February. Russia has not given its consent to this decision and has asked for additional time for consultations. The OPEC+ meeting that will decide on the production quota is currently scheduled for 5-6 March, although it might be moved to February due to the ongoing fall in oil prices.
81 RUSSIA Country Report March 2020 www.intellinews.com
