Russian Oil Firms Ready To Cut Production

At an energy ministry meeting earlier this month, Russia’s oil majors confirmed that they would be sticking to the production cuts that Russia had pledged in the OPEC+ deal, Vagit Alekperov, president and CEO of Russian oil producer Lukoil, said on Tuesday.

At the meeting on March 1, Russian oil firms unanimously agreed that they would fulfill their commitments and will cut production as agreed, Russia’s TASS news agency quoted Alekperov as saying on the sidelines of the CERAWeek in Houston today.

There was some “special opinion” among the Russian oil companies previously, Alekperov said, reminding reporters of the letter of Rosneft’s chief executive Igor Sechin to Vladimir Putin in which the Rosneft boss criticized the OPEC+ deal.

The firms have not discussed production plans for the second half of the year and have decided that they would do so after April, Lukoil’s boss said.

The current OPEC+ deal expires in June.

Alexander Dyukov, CEO at Gazpromneft, told TASS that it was too early to draw any conclusions about how the deal would proceed after June. The fate of the agreement should be reviewed after all countries will have achieved their respective reductions, Dyukov said, noting that some countries—including Russia—have not yet reached their quota under the deal.

Russia will speed up its oil production cuts this month and plans to reach its share of the OPEC/non-OPEC output reduction by end-March or early April, Russian Energy Minister Alexander Novak said last week.

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As part of the OPEC+ production cuts, Russia is taking the lion’s share of the non-OPEC cuts and pledged to reduce production by 230,000 bpd from October’s post-Soviet record level of 11.421 million bpd, to 11.191 million bpd.

Moscow, however, has repeatedly said that due to weather and geological conditions in the cold Russian winter, it cannot cut its oil production too quickly.

In mid-January, Khalid al-Falih, the energy minister of Saudi Arabia—the OPEC kingpin and key Russian ally in all OPEC/non-OPEC production policy deals since early 2017—had said that Russia was moving with the cuts “slower than I’d like.”

By Tsvetana Paraskova for Oilprice.com

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