Oil output can return to Oct 2016 level: Russia

Moscow, Ankara ink pipeline agreement, end gas dispute

FE Team | Published: May 27, 2018 21:03:36

MOSCOW, May 27 (Reuters): A return to the oil production levels that were in place in October 2016, baseline for the current deal to cut output, is one of the options for easing curbs, Russia's energy minister said on Saturday.
Sources said this week that Saudi Arabia and Russia were discussing raising OPEC and non-OPEC oil production to ease 17 months of strict supply curbs amid concerns that a price rally has gone too far.
"When we extended the agreement until the end of 2018, we spoke about such possibilities (of returning to the October 2016 level)," Novak told reporters.
"But a decision will be made in June," he added, referring to meetings of OPEC and non-OPEC countries in Vienna on June 22-23.
The existing deal came into force on January 1, 2017, and envisaged global oil producers reducing their combined output by 1.8 million barrels per day (bpd) to cut bloated stockpiles and prop up oil prices.
Russia's oil output reached a 30-year high of 11.247 million bpd in October 2016 and it pledged to cut it by 300,000 bpd to 10.947 mln.
In March and in April this year it failed to fully comply with the deal, pumping at the pace of 10.97 million bpd, a 11-month high.
Oil prices have risen to $80 per barrel, levels unseen since late 2014. Russian President Vladimir Putin said on Thursday that the price of $60 "suits Russia".
Novak was also quoted as saying on Saturday he expected Iran to reduce its output by no more than 10 per cent as a result of the move by the United States to withdraw from a nuclear deal and reinstate sanctions against Tehran.
Another report adds: Russian state gas giant Gazprom said on Saturday it had signed a protocol with the Turkish government on a planned gas pipeline and agreed with Turkish firm Botas to end an arbitration dispute over the terms of gas supplies.
The protocol concerned the land-based part of the transit leg of the TurkStream gas pipeline, which Gazprom said meant that work to implement it could now begin.
Turkey had delayed issuing a permit for the Russian company to start building the land-based parts of the pipeline which, if completed, would allow Moscow to reduce its reliance on Ukraine as a transit route for its gas supplies to Europe.