Moscow, October 9. – During an interview with radio station Business FM on the sidelines of REW 2017, Minister of Energy of the Russian Federation Alexander Novak discussed the outcomes of the event and the agreements concluded there, as well as the prospects for global oil markets, the development of the gas sector, the future of the energy balance in Russia and globally over the next two decades, and cooperation with foreign partners.
On implementation of an agreement to limit oil extraction, the Minister noted that, for the first time in the history of OPEC, which spans several decades, the international cartel is fulfilling 100% of its obligations. “We have never seen such figures before. The level of fulfilment has usually been far lower, but today we are witnessing the OPEC countries fully meeting 100% of their obligations. Non-OPEC countries are also in compliance”, he said.
At the same time, the Russian Energy Minister noted that a breakdown of the nuclear deal forged between the USA and Iran could have an impact on oil markets.
“Everything will depend on what decisions are taken. Iran produces a huge amount of oil and supplies it to global markets. The country currently produces 3.8 million barrels per day. Let’s not forget that when sanctions were introduced, production volumes dropped significantly”, he said.
Commenting on how the collapse of the US–Iran nuclear deal might impact the agreement to limit oil extraction, the Minister expressed his belief that such a development would be unlikely to lead to agreements being broken.
“We already have an example of this with the situation in the Middle East regarding Qatar. Specifically, the Qatari Minister participated in Russian Energy Week, and among the things we discussed were issues concerning oil and cooperation in this area. Qatar is part of the agreement and is continuing to fulfil its obligations to reduce extraction. Nothing has changed in this case, so it’s my hope that we’ll be able to see the agreement through to the end”, he said.
Responding to a question about the development of alternative energy, the Minister noted that all participants in discussions on this subject at Russian Energy Week had agreed that renewable energy sources would continue to grow. At the same time, he expressed the opinion that, bearing in mind the abundance of cheap natural resources in Russia – oil, gas, and coal – solar and wind energy are presently less competitive than traditional energy sources in the country. “We try to strike a balance when making decisions about developing and supporting renewable energies, because we need to keep the needs of the consumer in mind”, Alexander Novak explained.
Alexander Novak, Minister
of Energy of the Russian Federation, co-chaired the 9th meeting of the OPEC/Non-OPEC
Joint Ministerial Monitoring Committee.
The participants
reviewed the situation on the oil market and discussed possible further steps under
the agreement. The discussion touched upon the issue of allowed production
growth, as well as proposed regulating principles for OPEC/non-OPEC countries
cooperation after 2018.
The Head of the
Ministry of Energy outlined the main indicators of the Vienna Agreement
implementation success. According to the Minister, the Agreement execution by
OPEC and non-OPEC countries reached 147% in May. Since early 2017, OPEC+
members have managed to reduce the surplus of oil reserves by 380 million
barrels. “The market sees the success of our joint efforts to reduce the volume
of stocks and reacts positively,” emphasized the Minister.
According to
Alexander Novak, today we see the signs of a steady market balance, but it is
very important not to allow ‘overheating’ of potential petroleum shortage. “The
declaration we adopted in 2016 implies flexibility and aims to stabilize the
market. This means possible actions both in case of surplus and deficit,” the
Head of the Energy Ministry noted.
Following the
meeting of the extended monitoring committee, most of its participants received
recommendations to consider at an upcoming ministerial meeting of OPEC and the
subsequent ministerial meeting with the participation of non-OPEC
petroleum-exporting countries an increase of production of 1 million barrels
per day (from the current level), distributing this amount among the parties to
the agreement.
Source: minenergo.gov.ru