Russian compliance will pick up on a 'gradient scale', says Opec secretary general
The Opec and Russian-led group of producers will institutionalise their alliance at an extraordinary meeting in April
Russia’s compliance with a global oil cut is expected to pick up, with the Opec + alliance set to finalise partnership on supply reductions at an extraordinary meeting in April, according to Opec's secretary general.
"You have a combination of private and state companies, unlike in some of our member countries where you have a national oil company, so their [Russian] implementation normally stands on a gradient scale but they ramp up quickly to reach their target,” Mohammed Barkindo told reporters in Abu Dhabi on Sunday.
Saudi Arabia-led Opec and producers outside the oil exporters group headed by Russia, collectively known as Opec+, pledged to curb their supply for six months starting January following the steep plunge in oil prices towards the end of last year. Opec+ is trimming 1.2 million barrels of oil per day and will hold an extraordinary meeting in April to discuss the deal struck in December last year.
Saudi energy minister Khaled Al Falih had told reporters earlier at the Atlantic Council's Global Energy Forum in Abu Dhabi that Russian compliance was “slower” than he would have liked.
Mr Barkindo said Russia’s slow start to compliance was not unusual and was seen in earlier supply revisions undertaken by the alliance in 2017, the year Opec+ started coordinating oil production.
“The same thing is happening now but hopefully now with the experience they have, it will be much faster than in 2017,” he said.
Opec’s extraordinary meeting scheduled for April would achieve “finalisation of the charter of co-operation between Opec and non-Opec” , he added.
The alliance had announced its intention to evolve into a supergroup last year, as Saudi Arabia and Russia, key producers within and outside Opec, found their output eclipsed by rising production from the US thanks to shale.
The Opec chief also added that the group's production cuts were beneficial to US shale companies and played down President Donald Trump’s tweets against the alliance.
"President Trump as the biggest producer of oil in the world has every right to take more than a passing interest in what we’re doing as Opec and non-Opec with the Declaration of Co-operation,” he told reporters.
However he added, "our decisions are beneficial to the US companies, and by extension to the US economy and we’re helping in no small measure in helping with the growth and development of the US oil industry through our stabilisation measures.”
Mr Barkindo said it was “premature” to talk about compliance this early as the production adjustments had only come into effect two weeks ago and added that the group still hadn’t worked out quotas for cutting supply.
"We have no quotas, what we have are supply adjustments to achieve the 1.2 million bpd target of adjustments to enable us to avoid resurgence of stock buildup in 2019,” he said.
Updated: January 14, 2019 06:53 AM