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Russia was close to complying 100 percent with its oil production quota under the OPEC+ deal in May, Russian Deputy Prime Minister Alexander Novak said on Friday.
“It will be better than in April. Close to 100%,” Novak told reporters on the sidelines of an economic forum in Russia, as quoted by the TASS news agency.
Russia, the key ally of Saudi Arabia in the OPEC+ oil production agreement, has regularly failed to comply with its quota under the deal. It was estimated to have achieved just a 91 percent compliance rate in April.
In May, Russia’s production of crude oil and condensate rose by 11.2 percent year over year to 44.21 million tons, or around 10.45 million barrels per day (bpd), according to official data quoted by Interfax earlier this week.
A week before the OPEC+ meeting reaffirmed on Tuesday plans to ease the total production cuts by 840,000 bpd in July, OPEC has had to remind once again the laggards in compliance in the deal to submit plans on how they will compensate for pumping above their respective quotas in recent months, sources at OPEC told Energy Intelligence.
Seven out of the ten producers that have busted their quotas have yet to submit plans to the OPEC Secretariat on how they plan to compensate for over-production. As per estimates by Energy Intelligence Russia is estimated to be the OPEC+ producer that has overproduced the largest volume between May 1, 2020, and April 30, 2021, pumping at 80,000 bpd above its quota on average for the year to end-April.
According to Energy Intelligence’s sources, Russia thinks that complying at around 95-96 percent is good enough. The other key member of the OPEC+ alliance, Saudi Arabia, has started to accept that the lack of full Russian compliance could be the price to pay for keeping Moscow firmly supporting and participating in the production cut deal.
By Charles Kennedy for Oilprice.com
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Charles is a writer for Oilprice.com
The rise in Russia’s production of crude oil and condensate was due to two reasons. The first is that OPEC+ has previously agreed to discount condensates from Russia’s total production as it didn’t consider they qualify as crude. The second reason is that OPEC+ has agreed in an earlier meeting to reduce Russia’s share in the cuts for April and May.
But then there is the case of Saudi Arabia. Saudi Arabia has been saying that it hasn’t only been complying with its share of the cuts but it has also unilaterally made an additional million barrels a day (mbd) cut in its production and yet its exports have been going up. How does it square a circle? It does it by dipping into its stored crude oil and increase its imports. It is in effect a case when cuts aren’t real cuts.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London