Russia’s energy minister said he had reached a framework agreement with oil companies on how to implement an output cut, but the producers said there were still details to be worked out.
There are doubts that Russian oil companies, with their own interests and plans, will be able to hammer out a joint strategy to cut the country’s production, which has reached a post-Soviet high of more than 11 million barrels per day (bpd).
Russia as well as other non-OPEC and OPEC producers have agreed to slash output by almost 1.8 million bpd to fight global oversupply, which has hammered the price of oil, the chief commodity export for Moscow and some other developing countries.
Of that, Russia has pledged to cut output by 300,000 bpd to 10.947 million bpd in the first 6 months of 2017.
«We agreed that the reduction will be in proportion to the production volumes (of each company),» Energy Minister Alexander Novak told reporters after meeting 12 oil producers that account for around 90 % of Russian output.
This is the 1st such deal between the OPEC and Russia since 2001, when Moscow agreed to cut oil exports by 150,000 bpd – a promise it later reneged on due to rising oil prices.
OPEC confirmed the decision to cut output at its regular meeting in Vienna on November 30. Since then, oil prices have jumped by almost a 5th to $55 a barrel.
Nikolai Tokarev, the head of Russia’s state-controlled monopoly Transneft, said the deal was unlikely to affect Russia’s export plans.
«This is about output, not exports,» he said after the meeting.
Novak reiterated that the cuts will be voluntary for each company, while Gazprom Neft head Alexander Dyukov said the producers would continue talks.
«The main thing is that Russia agreed on cuts. We can also agree among ourselves,» Dyukov said about discussions between the companies on how to implement the reduction.
Alexander Novak also said there would be «separate discussions» on production-sharing agreements involving a number of foreign energy companies, including ExxonMobil.
The minister indicated his ministry was sticking to its oil production forecast in Russia for the next year, set at 548-551 million tonnes (11.01-11.07 million bpd).
The agreement to cut production is effective for the 6 six months of the year with an option to extend.