VIENNA (Sputnik) – Russia is carefully studying proposal the of the Organization of the Petroleum Exporting Countries (OPEC) to become an observer in the organization, Russian Energy Minister Alexander Novak said Saturday.
“There is really such an option, it is being considered, and we are now studying this issue carefully,” Novak said, answering a question on whether Russia is ready to become an observer in the OPEC.
The statement refers to the offer by OPEC, voiced by Saudi Energy Minister Khalid Falih earlier in the day:
“We invited them [Russia] to join as an observer and we believe that they are considering it. We are looking forward to getting their formal application. And I can assure you that we will welcome Russia’s membership to OPEC formally,” Falih said at the press conference after the OPEC and non-OPEC talks.
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In his speech, Russian Energy Minister Alexander Novak announced that Russia would be able to increase its oil output by 170,000-200,000 barrels per day over the second half of the year.
“About 170,000 barrels per day, give or take, it is an approximate [figure] … We will see how much is needed, it will be sufficient for Russia to increase [its production] by up to 200,000 barrels per day over the second half of the year, as part of [its contribution to production] increase by 1 million [barrels per day],” the minister said at a briefing following the 4th OPEC-non-OPEC ministerial meeting, when asked about Russia’s contribution to the agreed oil output increase.
When asked when Russian companies could start stepping up oil production, Novak noted that “everything will depend on how quickly companies would be able to prepare” for restoring the previous levels of production.
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As Saudi Energy Minister Khalid Falih stated, the actual production hike of the countries participating in the oil production cut deal of the Organization of the Petroleum Exporting Countries (OPEC) and other producing states will be closer to 1 million barrels per day due to the fact that the deal parties decided to go away from the strict quota principle.
“If we allocated quotas, it has been estimated that only 60 percent of the number that’s been allocated will be delivered. So if we took 1.5 [million barrels per day] and allocated it on pro-rata basis among all countries given capacities of countries that can increase, it will give us about 60 percent, about a million out of 1.5 million. Because we went away from allocating quotas, we will be closer to a million than 600,000,” Falih explained, asked what the actual output hike of OPEC and non-OPEC would be.
Speaking about the oil output, Oman’s Oil and Gas Minister Mohammed Rumhi told journalists on Saturday after OPEC-non-OPEC talks in Vienna countries participating in the oil production cut deal of the Organization of the Petroleum Exporting Countries (OPEC) and other producers may start increasing output as early as in July.
“I think, the July figures, which will be reported in August, will show some growth … But I don’t think, this number – 600,000 or a million, is going to be realized immediately. My suspicion — it is going to take at least six months to achieve the level that was agreed,” Rumhi said.
Earlier on Saturday, countries participating in the oil production cut deal of the Organization of the Petroleum Exporting Countries (OPEC) and other producers agreed on the oil output increase by up to 1 million barrels per day, with the level of collective compliance with the Vienna deal agreed to be kept within the 100-percent target.
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OPEC and several non-cartel oil producers, including Russia, reached a deal in Vienna in 2016, agreeing to cut oil output by a total of 1.8 million barrels per day in an effort to stabilize global oil prices. Non-OPEC states pledged to jointly reduce oil output by 558,000 barrels per day. The agreement, which came into effect in 2017, has been extended twice since then and is expected to remain in force until the end of 2018.