Russia yet to finalise stance before OPEC+ considers deeper oil cuts

Russia yet to finalise stance before OPEC+ considers deeper oil cuts
# 03 December 2019 15:03 (UTC +04:00)

Russian Energy Minister Alexander Novak said on Tuesday he expected this week’s meeting of OPEC oil producers and their allies to be constructive but said Moscow had yet to finalise its position in talks on possible additional supply curbs, APA reports citing Reuters.

Russia agreed to reduce output by 228,000 barrels per day (bpd) to about 11.18 million bpd in 2019 as part of cuts agreed by the group known as OPEC+. But it pumped more than its quota in November, producing 11.244 million bpd.

The Organization of the Petroleum Exporting Countries, Russia and other producers, which previously agreed to reduce combined output by 1.2 million bpd or 1.2% of global demand until March, hold discussions in Vienna on Thursday and Friday.

“I will not tell you anything now as we are still finalising our position,” Novak told reporters. “Lets wait … But I think the meeting, as usual, will be of constructive nature.”

Two sources said on Monday that OPEC+ was discussing cutting output by at least an additional 400,000 bpd, as Riyadh seeks high oil prices to balance its budget and help Thursday’s pricing for Saudi Aramco’s initial public offering (IPO). The Saudis have been lobbying others to deepen cuts.

Novak said Russia’s average cut was 195,000 bpd in November and said Moscow aimed to comply fully with the quota in December.

Russia earlier called for a change to the way its output is measured to exclude gas condensate, which accounts for about 7%-8% of Russia’s total oil production, or about 800,000 bpd.

Novak told reporters he planned to discuss excluding condensate from Moscow’s quotas at the OPEC+ meeting.

By excluding condensate and only taking into account oil production, Novak said Russia’s output could be about 225,000 bpd to 230,000 bpd less in December.

“That said, we will discuss with our colleagues to take into account our statistics the same way as for OPEC countries – excluding condensate,” the minister said.

Vagit Alekperov, chief executive of Russia’s No.2 oil producer Lukoil, said in comments broadcast on Tuesday that it would not be expedient to deepen global oil production cuts in the winter season, especially for Russia.

Russian data cites production in tonnes. Reuters uses a conversion rate of 7.33 barrels per tonne of oil.