Amid negotiations about a reduction of oil production between members of the Organization of the Petroleum Exporting Countries (OPEC), Russia reported its highest post-Soviet record oil output.
Russia’s ministry of energy announced Saturday that in September it pumped a record 11.1 million barrels per day (bpd), the most since the demise of the Soviet Union and 4% above the previous output of 10.7 million bpd, according to preliminary estimates. Russia, as well as OPEC members, has struggled with the long recession as oil prices stay below $50 a barrel. In 2008, as a result of the financial crisis, oil prices plunged from $147 a barrel to less than $35.
On Wednesday, during the informal meeting in Algiers, for the first time in eight years, OPEC agreed to outline a deal that limits oil output. “We decided the range of production for OPEC of 32.5 to 33 million barrels a day should be divided between OPEC member countries,” Iranian minister Bijan Namdar Zanganeh said after the meeting. Working out an output freeze as well as the levels of production by each country is the goal of the next formal meeting in Vienna slated for November. However, some doubt whether OPEC will follow through on the commitments made at Algiers.
Russia’s oil minister, Alexander Novak, said after the Algiers agreement was announced, that “Russia will carefully consider those proposals which will be eventually drawn up”, but “our position is keeping the volume of production at the level that has been reached.” Nevertheless, Russia is flexible and is open for joint OPEC efforts to stabilize the oil market.
Energy Minister Alexander Novak is expected to lead the Russian delegation at the September 26-28 International Energy Forum (IEF) in Algiers, Algeria, where OPEC and non-OPEC countries will renew talks on a possible oil output freeze.
“There is the possibility that there’ll be an increase in oil production as a result of shale oil and then the prices will fall again,” Siluanov said in an interview with CNBC, a US cable business news broadcaster. The minister called Russia’s budgeted $40 per barrel oil price estimate for 2017-19 “conservative.” “In our view, this is a balanced price at the moment. It’s a price at which the oil producers, especially shale oil producers, are at their capacity levels at the moment,” he said.
On Friday, Russian Energy Minister Alexander Novak held a meeting with China’s National Energy Administration head, Nur Bekri, in Beijing. According to the statement, the sides briefly summed up the results of bilateral energy cooperation in 2015.
“In particular, the supply of crude oil from Russia to China [in 2015] increased by 17.5 percent compared to the same period of 2014. In total, 26.68 metric tons of oil were delivered to China in 2015… The electricity export target [to China] amounts to 3 billion kilowatt-hours in 2016 (3,299 billion kilowatt-hours were delivered in 2015),” the ministry’s statement reads.
According to the ministry, Russian supplies of high-quality coal to China decreased by 39 percent in 2015 relative to 2014, dropping to 16.4 million metric tons.
During the meeting, the officials also discussed opportunities for expanding bilateral energy cooperation and the implementation of joint infrastructure projects.
The IRNA news agency quoted Mehdi Asali, who also heads the Energy Associations Affairs Department at Iran’s Ministry of Petroleum, as saying “the oil supply surplus in the market has led to falling prices which can be offset by decrease in production.”
Asali made his comments ahead of a technical meeting of oil experts from OPEC and non-OPEC states in the UN Vienna headquarters on October 21.
On Wednesday, Russia’s Energy Minister Alexander Novak told reporters that Russia was planning to meet with Saudi Arabian counterparts in November to discuss the current oil market.
Global oil prices have halved compared to summer 2014 levels, when the price of Brent crude stood at about $115 per barrel. Current oil prices are hovering around $50 per barrel.