Since the start of the OPEC-Russia production cut deal, Russia’s oil companies and government have received the equivalent of around US$41.5 billion more in proceeds, thanks to the higher oil prices, Russian Energy Minister Alexander Novak said on Tuesday.
Due to the higher oil prices as a result of the pact, Russia’s federal budget has received so far US$29.41 billion (1.7 trillion rubles) more, while the oil companies—a combined US$12.11 billion (700 billion rubles) more since the beginning of 2017, Novak said.
The higher revenues are the result of the $15-$20 increase in oil prices, compared to the price of oil before the deal between OPEC and a dozen non-OPEC nations led by Russia was signed, the minister said.
Russia is cutting 300,000 bpd as part of the pact with OPEC, and although there have been voices and speculation that some Russian companies are unhappy with the agreement that hampers their production expansion plans, Moscow has been keeping its end of the deal so far.
Russia’s crude oil production in January was basically flat compared to December 2017, after rising production at foreign firm-led projects compensated for small declines at the two major Russian oil producers, Rosneft and Lukoil. Related: Oil Majors Optimistic Despite Price Plunge
The oil price rally earlier this year has posed caused many to wonder whether Russia and/or some OPEC members could ditch the deal because they wouldn’t want oil prices too high—a scenario that could incentivize U.S. shale production too much.
U.S. production is beating previous growth expectations, while minister Novak said in an interview with Russian news agency Interfax published on Monday that the goal of the OPEC-Russia deal in bringing the oil market back to balance had been two-thirds achieved.
Asked how the cartel and allies will exit the deal, Novak said that it should be gradual and will likely take several months—between two and five months—to avoid a sharp increase in production that could again result in oversupply.
By Tsvetana Paraskova for Oilprice.com
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