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FSUOGM POLICY FSUOGM
Russia vows to keep working with OPEC on supply cuts
RUSSIA
RUSSIAN President Vladimir Putin has said his country will continue working with OPEC to reduce oil production in order to balance the international oil market.
OPEC and its non-member oil exporting allies – known as OPEC+ – have been reducing output since 2017 to prevent prices from slid- ing in the face of rising US production. OPEC+ includes Russia, Mexico and Kazakhstan.
“Our goal is for the market to be balanced, acceptable for producers and consumers and the most important – and I want to underline this – predictable,” the Russian president told a forum on November 20. “Russia has a serious impact on the global energy market but the most impact we achieve is when working along with other key producers.”
Putin noted that the government was no longer concerned with being the world’s largest oil producer, a role now fulfilled by the US.
While Russia reduced its oil output in October to 11.23mn barrels per day, from 11.25mn bpd in September, it was still shy of the 11.17-11.18mn bpd cap set under the existing global deal.
The following day Petroleum Association of Japan (PAJ) president Takashi Tsukioka told Reuters that OPEC and its allies would likely agree to extend supply cuts when they met in
December. OPEC will meet on December 5 before holding talks with members of OPEC+.
Unnamed sources told Reuters in July that OPEC had agreed to extend supply cuts until March 2020 in order to prop up crude prices.
While Putin was keen to show a united front with OPEC, Moscow does have some concerns about the way the production cap has been applied to Russian output.
Russian Energy Minister Alexander Novak said separately on November 20 that the coun- try was aiming to produce 11.17-11.25mn bpd and that the final figure would depend upon its talks with OPEC over how to categorise Russian gas condensate.
Novak said Russia would like condensate, production of which is rising thanks to grow- ing liquefied natural gas (LNG) export capacity, to be excluded from its production cap. Novak added that while condensate was included in Russia’s oil production statistics, with the fuel accounting for around 6% of the country’s oil output, it was not exported.
“We believe that gas condensate should not be taken into account [when tallying overall oil production], as this is an absolutely different area related to gas production and gas supplies,” the minister said.
Week 47 27•November•2019 w w w . N E W S B A S E . c o m P9
