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Despite Accelerated Cuts, Russia Misses OPEC+ Deal Target

Russia continued to gradually reduce oil production in March, but it missed its production cut target under the OPEC+ deal, data from Russia’s Energy Ministry showed on Tuesday.

As at the end of March, Russia cut its oil production by 225,000 bpd compared to October, excluding output from production sharing agreements (PSAs), while production was reduced by 190,000 bpd from October levels, if PSAs are taken into account, Russian Energy Minister Alexander Novak said in a statement carried by the Energy Ministry. 

As part of the OPEC+ production cuts between January and June, 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.

Russian production in March stood at 11.298 million bpd, according to energy ministry data in tons, calculated in million bpd by Reuters using a 7.33 barrels/tons ratio.

In early March, Novak said that Russia would speed up its oil production cuts and plans to reach its share of the OPEC/non-OPEC output reduction by end-March or early April.

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.”

Russian oil companies are currently sticking to the production cuts through June, but they have not discussed production plans for the second half of the year and have decided that they would do so after April, Vagit Alekperov, president and CEO of Russian oil producer Lukoil, said last month.

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Last week, reports had it that Russia—always the reluctant actor in OPEC+ cuts extensions—may not support an extension of the deal for the full six months until the end of the year.

By Tsvetana Paraskova for Oilprice.com

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