Russia Hesitates on Length of OPEC Oil Cuts ExtensionBy , , and
Moscow isn’t convinced that decision is needed this month
Different options are on table, including 3-month extension
OPEC has yet to convince Russia that it’s necessary to reach an agreement to extend oil-output cuts at a meeting in Vienna later this month, as officials and oil bosses in Moscow still haven’t decided how long the production deal should last.
The world’s largest energy exporter still believes it’s too early to announce anything this month, two people with knowledge of matter said. Another issue is a duration of the extension, with options including an additional three months of cuts being considered.
All of these questions were under discussion as Russian Energy Minister Alexander Novak met with key oil-producing companies on Wednesday, the people said, asking not to be named as the information isn’t public yet. As that meeting in Moscow came to an end, Gazprom Neft PJSC head Alexander Dyukov and Lukoil PJSC First Vice President Ravil Maganov said they had agreed to continue talks with the ministry next week. They declined to comment further to reporters.
The Organization of Petroleum Exporting Countries and its partners, including Russia, are meeting in Vienna on Nov. 30 to decide whether to prolong the deal to curb oil production beyond its scheduled expiry in March. Speculation has grown that they’ll prolong the measures to the end of 2018 after Russian President Vladimir Putin signaled last month that he’s open to such a move. Yet, he also said there had been no decision in Moscow.
Cooperation with OPEC is “fruitful," Tatneft Chief Executive Officer Nail Maganov said after the meeting in Moscow with other Russian oil chiefs.
"It is necessary to continue both monitoring and discussions,” said Gazprom’s Dyukov, adding that only a short time has passed since the output pact was first extended. “In a week we will meet and discuss” it again, he said.
Benchmark Brent crude fell 1.2 percent to $61.49 as of 10:21 a.m. in London.
Novak told reporters on Tuesday that the future of the pact with OPEC will be discussed with companies, without elaborating further. Lukoil’s billionaire CEO Vagit Alekperov said last month that the deal should end if oil prices reach $60 a barrel, while Rosneft PJSC CEO Igor Sechin has warned that U.S. shale output is undermining their efforts.
OPEC and allied oil producers should extend their production cuts beyond March to help rebalance the market, the United Arab Emirates said Tuesday. The group sees no opposition to prolonging the deal that helped benchmark Brent crude jump to a two-year high of more than $60 a barrel in the past month. Discussions are now focusing on the duration of the extension, according to OPEC Secretary-General Mohammad Barkindo.
The producers won’t necessarily decide this month whether to extend the cuts, Novak said on Nov. 2. It’s hard to see if such a move is necessary so long before the deal’s expiry, he said.