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Lukoil’s chief executive Vagit Alekperov has joined Rosneft’s Igor Sechin in voicing his opposition to another extension of the OPEC+ oil production cut agreement, Reuters reports, citing Russian news agency RIA Novosti.
“I am a supporter of keeping everything stable until April, when the agreement expires, and only after that... to make decisions,” Alekperov said.
This report follows an earlier one, from Tuesday, in which Reuters quoted unnamed source as saying OPEC would discuss deepening the cuts, which are supposed to expire at the end of March next year.
“In December we will consider whether we need more cuts for next year. But it is early now, things will be clearer in November,” one source said.
OPEC and Russia agreed on the extension in June despite Russian oil companies’ unwillingness to continue capping their production. Not that they have been particularly strict about it. Last month, Energy Minister Alexander Novak said the country had still not reached its quota for the cuts, assuring interested parties it would do so this month.
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Meanwhile, Rosneft’s Sechin has been particularly vocal in his opposition to the cuts, arguing that it put Russian oil at a disadvantage on international markets while favoring U.S. shale. However, it seems that the Kremlin is still calling the shots, with Novak managing to convince the industry that higher prices and lower production is not too bad a combination.
How far Sechin’s patience—and that of other oil executives—extends remains to be seen, especially since Russia has been budgeting for lower oil prices for several years now to boost its resilience to a possible repeat of the 2014 price collapse.
Yet prices have failed to climb much higher despite Saudi Arabia’s over-compliance with the cuts and the sanctions-related decline in production in Venezuela and Iran, with worry about global demand outweighing the supply controls. This might add weight to Sechin and co’s argument against Russia’s continued participation in them.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.