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Due to weather and geological conditions in the cold Russian winter, Russia cannot cut its oil production too quickly, Energy Minister Alexander Novak said on Thursday, reiterating Moscow's commitment to stick to the new OPEC+ deal and to gradually reduce production.
Russia will try to cut its oil production faster, Novak noted.
A few days ago, 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—said that Russia was moving with the cuts “slower than I’d like.”
“Russia has started, slower than I’d like, but they’ve started, and I am sure as they did as in 2017 they’ll catch up and be a positive contributor to re-balancing the market,” al-Falih told CNBC on Sunday.
The new OPEC+ deal, under which Russia will be cutting 228,000 bpd, is for a six-month period starting January 1, 2019 with an option to review in April.
Russian oil companies will reduce their production by that amount during the first quarter of 2019, Novak said after the agreement was reached in December.
Novak has said that Russia is planning to reduce its oil production by 50,000 bpd to 60,000 bpd in January as part of the new OPEC+ deal, and will not be cutting its 228,000-bpd share outright at the start of the agreement. Russia has already drafted a timetable for how much oil production it would reduce each month until it reaches its share of the OPEC/non-OPEC production cut, Novak said, reaffirming Moscow’s position that its reduction would be gradual, just like in the previous agreement between OPEC and the Russia-led non-OPEC partners.
Last Friday, Novak said that Russia had already cut production by some 30,000 bpd compared with October—the baseline for the cuts—and still aimed to reach a cut of 50,000 bpd by the end of this month.
Today, Novak told Russian news agency RIA Novosti that he would be meeting with al-Falih at the World Economic Forum in Davos next week to discuss joint projects, cooperation, and the implementation of the OPEC+ deal.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.