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Due to the OPEC + production reduction agreement, Russia’s oil production could decrease by 15 percent annually in 2020, Russian Energy Minister Alexander Novak told the Interfax news agency in an interview published on Wednesday.
This year, Russia’s crude and condensed oil production could be between 480 million tons and 500 million tons, or between 9.6 million bpd and 10 million bpd, in case of 100 percent compliance with the new agreement of the OPEC +, Novak told Interfax.
According to Reuters estimates, a 2020 production drop would be the first decline in Russia’s oil production since 2008.
Crude and condensed oil production in Russia hit a record for the post-Soviet era in 2019, despite Moscow’s pivotal role in OPEC + cuts. Russia pumped 11.25 million bpd of crude and condensed oil in 2019, compared to 11.16 million bpd in 2018, which was the previous production record in Russia’s post-Soviet era.
The new 2019 oil production record showed that one of the key parts of the OPEC + deal, and certainly the key part in the field of non-OPEC producers in the deal, failed to live up to its share of the cuts for most of 2019. Related: Trump Could Use ‘Nuclear Option’ To Make Saudi Arabia Pay For Oil War
Referring to the new OPEC + agreement in which Russia promised to reduce its production to 8.5 million bpd in May and June from a baseline of February 2020, Novak said that all companies would comply with the agreement and Russia would have a 100 percent compliance record.
Russia has rarely achieved this in previous OPEC + pacts in the past three and a half years.
Russia will have to cut its production by around 2 million bpd, or 19 percent, since February 2020, Novak told Interfax, adding that all companies in Russia, including projects under shared production agreements with the big international oil companies, they will reduce production. Each company has to contribute to the cuts so that the market can begin to balance out of crisis mode, Novak told Interfax.
Earlier this week, Novak said that despite the new OPEC + deal going into effect this week, oil prices will not increase much in the near future due to high global inventories.
By Tsvetana Paraskova for Oilichelin
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