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Russia needs to discuss with its OPEC partners the exclusion of gas condensate from its cap under the OPEC+ production cut pact, as condensate isn’t exported, while it is included in Russia’s oil production statistics, Russian Energy Minister Alexander Novak said on Wednesday.
Production of gas condensate—a side product known as ultra-light oil—in winter months in Russia is high and it is set to increase with the start-up of new gas fields.
According to Novak, condensate production is one factor that keeps Russia from fully complying with its share of the cuts.
Russia aims to comply with the deal in November, but it also believes that some nuances in production, such as condensate output, should be taken into account, Novak told reporters on Wednesday.
The condensate mainly stays in Russia and therefore does not affect global supply, he said.
“This should be discussed with partners, as condensate does not go for export,” Novak noted.
Russia, as leader of the non-OPEC group of producers who are cutting output as part of the OPEC+ deal, is taking the lion’s share of non-OPEC cuts and has committed to keep its production at up to 11.191 million bpd, down by 230,000 bpd from the 11.421 million bpd reference production level from October 2018.
Russia, however, includes condensate production in its monthly oil production statistics, while many other producers do not.
Russia has been slow to comply with its share of cuts, pumping slightly above its quota in recent months, and missing its production target in October yet again, despite promises that it would fall in line for October.
As the early December meeting of the OPEC+ pact approaches, Russian President Vladimir Putin said on Wednesday that Russia and OPEC have “a common goal” to keep the oil market balanced, and that Russia would continue to cooperate with the cartel to keep the market stable.
Novak, for his part, said that he would discuss the OPEC+ deal with Russian oil companies before the December meeting. But the minister noted that he doesn’t want to share the Russian position that he will take to Vienna.
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.