Russian Energy Minister, Alexander Novak says the Organisation of Petroleum Exporting Countries and non-OPEC allies, including Russia, may consider ending their oil production cuts deal next year in order to preserve market share and implement projects.
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“As for production cuts, this is not an indefinite process and we will need to gradually make a decision to exit in order to maintain market share and so that our companies can fund and implement their promising projects. I think we will be considering this option this year as well,” Novak told the Rossiya 24 channel in an interview, when asked about the prospects of the OPEC+ deal for the coming year.
Novak had previously said OPEC+ may consider easing oil production quotas at the group’s next extraordinary meeting in March, which will decide the future of the deal after its expiry date on April 1, according to S&P Global Platts.
“The deal showed results in 2017-19, during this period we will not only reduced, but also increased production. Coordination itself has a positive effect on markets — volatility decreased and investments resumed,” he said.
The Minister also said he did not see any critical moments at present that could affect the market or justify speculation about oil prices dropping to $30 per barrel.
“The market is more or less balanced, volatility has decreased and there are not so many external shocks. We see stability, during winter, prices are above $60/b, which is positive,” the energy minister said.
As for warmer months ahead, OPEC+ may increase output to meet increasing demand, if needed, he added.
For the first three months of 2020, OPEC, Russia and their nine other allies agreed to oil production cut of 503,000 barrels per day to 1.7 million bpd.
Russia agreed to expand its 228,000 bpd in cuts by an additional 70,000 bpd for a total of about 300,000 bpd. Its quota will be 10.328 million bpd, based on figures Novak provided, with its condensate production now exempted from its cap — a significant concession granted to all of the non-OPEC participants.