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The OPEC+ deal has resulted in economic benefits for Russia which has seen its National Wealth Fund (NWF) double its financial reserves to US$124 billion in 2019, Kirill Dmitriev, chief executive at the Russian Direct Investment Fund (RDIF), told the TASS news agency on Wednesday.
Russia’s National Wealth Fund is a part of federal budget assets, primarily supporting the country’s pension system.
Russia has been leading the group of non-OPEC producers that joined forces with OPEC at the beginning of January 2017 to reduce their combined oil production in the hope of draining down the oil oversupply and raising oil prices.
Russia’s budget has benefited from the higher oil prices over the last couple of years since the so-called OPEC+ production cuts entered into force, top Russian officials have said.
The NWF saw its reserves double from US$65 billion (4.04 trillion Russian rubles) to US$124.4 billion (7.7 trillion rubles) last year, Dmitriev told TASS today.
The Russian budget—excluding the NWF—received an additional US$113 billion (7 trillion rubles) during the years in which the deal has been in force, he added.
“This largely indicates that the NWF resources through the fiscal rule have come exactly from the OPEC+ deal, increasing our reserves twofold,” Dmitriev said.
Related: This Emerging Oil Hotspot Threatens The OPEC Deal
The investments the NWF plans for various projects of national importance “are mainly the investment of extra money Russia has earned on account of the OPEC+ deal,” Dmitriev told TASS.
Crude oil and condensate production in Russia hit a record high for the post-Soviet era in 2019, despite Moscow’s key role in supporting the ongoing OPEC+ production cuts. The new record oil production shows that one of the key parties to the OPEC+ deal, and certainly the key party in the non-OPEC camp of producers in the agreement, did not comply with its share of the cuts for most of 2019.
Removing condensate from the level of compliance—a concession Russia won at the December OPEC+ meeting—would make Russia’s compliance record look more acceptable to OPEC’s leader and key partner in the deal, Saudi Arabia, which is pushing for all rogue producers in the pact to fall in line with their quotas.
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.