Page 83 - RusRPTJuly18

Kommersant daily reported on June 18 citing the Minister of Energy Alexander Novak. Russia and Saudi Arabia are the leading players behind the Opec+ oil output deal and the decision to up the output could reportedly be approved at the upcoming Opec+ summit on June 22-23 in Vienna and come into force from July 1. "The potential revision of the OPEC+ agreement has already started to affect oil prices, putting pressure on them and adding to volatility," VTB Capital commented on June 18. The Opec+ production-cut agreement suggests a 1.8mnbd reduction versus October 2016 but de facto the countries are over delivering, Aton Equity comments, reminding that in May 2018 output was cut by 2.7mnbd mostly due to Venezuela markedly dropping its production. Aton believes that "lifting of production cut commitments is widely expected by the market, with the devil being in the detail," and anticipates to see how much production might be increased and how this increase will be allocated between members where Russia and Saudi Arabia are the leaders. VTB argues that all Russian oil companies are capable of increasing their crude output quite quickly in order to close their quotas, while being "hamstrung" by the OPEC+ production cut agreement in the upstream segment. The bank believes that easing the production cut would be supportive for the largest Russian oil sector names, despite it potentially adding some volatility and putting oil prices under pressure.
OPEC raised its forecast for oil and condensate production in Russia this year by 0.03mn barrels per day to 11.07mn barrels per day. OPEC retained its estimate of oil and condensate production in Russia in 2017 at the level of 11.17mn barrels per day. The new forecast includes data on actual production for the first quarter, as well as for April and May 2018. OPEC signed an agreement on reducing oil production on November 30, 2016. Under the terms of the deal, its participants were to reduce oil production in the first half of 2017 by 1.8mn barrels per day. According to the agreements, Russia reduced by 300,000 barrels per day. From that moment the agreement was extended twice. Now its operation is planned until the end of 2018. Whether to extend the agreement for the first half of 2019, the participants of the deal will discuss in mid-2018, Energy Minister Alexander Novak said earlier.
RUSSIA Country Report July 2018 www.intellinews.com