Russian Energy Minister Notes Efficiency of Oil Production Cuts Deals

Russian Energy Minister Alexander Novak on Wednesday said that the agreements on oil production cuts were efficient and that Russian companies were reducing oil output voluntarily, with production cuts amounting to 117,000 barrels per day in January.

NOVO-OGARYOVO (Sputnik) — The Organization of the Petroleum Exporting Countries (OPEC) agreed in November 2016 to cut oil production by 1.2 million barrels per day to 32.5 million barrels per day for the entire cartel from 2017. On December 10, 2016, OPEC held a meeting with non-OPEC countries in Vienna, at which non-OPEC countries decided to cut oil output by 558,000 barrels per day with Russia's share totaling 300,000 barrels per day from January 2017.

"All countries had serious intentions regarding the implementation of the agreement [on oil production cuts]. Most countries have begun to implement the agreement. On the basis of preliminary data, we see that the reduction of output in January amounted to about 1.4 million barrels per day," Novak said at a meeting of government members with Russian President Vladimir Putin.

"Some countries have cut more than planned and are ahead of schedule. In January, Russia's production fell by 117,000 barrels per day, which is more than twice the original plans of companies," he said.

Novak praised the agreements between OPEC and other oil producing countries as efficient, saying oil prices were higher than without such deals.

"The effectiveness of the agreements and made decisions is already visible, as we have noted the stabilization of prices at the level of $55 per barrel. According to assessments of leading analytical agencies, the price is much closer to the fair price, about [$] 10-15 higher than it would be without the deal," he said.