28.03.2017, 19:23
Rosneft moves the goalposts on compliance
OREANDA-NEWS. Russia is over complying with output cuts, state-controlled Rosneft said today in an unusual interpretation of the country's commitments under the Opec/non-Opec production deal.
"Russia is on schedule with the gradual reduction of production in achieving the target. Year-to-date compliance versus the plan is about 140pc, 137pc to be exact," Rosneft vice president for commerce and logistics Otabek Karimov told the FT Global Commodities Summit, citing figures for January-March.
"There is no formal schedule," Karimov said. "But there is a target of 300,000 b/d that Russia is supposed to decrease production by. And the target is supposed to be achieved some time in April-May."
Russia agreed to cut production by 300,000 b/d from an October 2016 baseline of 11.18mn b/d. Its output was just 120,000 b/d below the base line in January-February, leaving it 40pc compliant. Russia is responsible for more than half the nearly-600,000 b/d cuts in the non-Opec side of the output deal. Its slow progress towards its full cut is the main reason behind a less than 50pc compliance rate among the 11 non-Opec countries in the deal.
Karimov's assertion relies on a selective reading of what Russia committed to under the deal. Energy minister Alexander Novak said Russia would gradually cut production to meet its target at some point in the second quarter this year. "According to our understanding, that cut of 300,000 b/d should be done sometime in April," Karimov said.
But Russia's gradual reductions are a unilaterally declared position, at odds with the agreement's start date in January. Russia's slow progress has caused friction among other countries in the deal, notably Saudi Arabia.
"We made clear we will not carry the burden of free riders," Saudi oil minister Khalid al-Falih said in Houston earlier this month.
Karimov's statement is likely to reflect a certain amount of posturing as participants consider extending the deal beyond June. Debate over exactly how compliant participants are has become muddied by pronouncements from the joint ministerial monitoring committee (JMMC). Saudi Arabia increased production by more than 250,000 b/d in February. And while it was still meeting its commitment, the output increase left Opec's overall compliance rate at 103pc last month, compared with 115pc in January. But the JMMC said compliance rose in February, raising questions about how exactly the success of the deal is being measured.
"Russia is on schedule with the gradual reduction of production in achieving the target. Year-to-date compliance versus the plan is about 140pc, 137pc to be exact," Rosneft vice president for commerce and logistics Otabek Karimov told the FT Global Commodities Summit, citing figures for January-March.
"There is no formal schedule," Karimov said. "But there is a target of 300,000 b/d that Russia is supposed to decrease production by. And the target is supposed to be achieved some time in April-May."
Russia agreed to cut production by 300,000 b/d from an October 2016 baseline of 11.18mn b/d. Its output was just 120,000 b/d below the base line in January-February, leaving it 40pc compliant. Russia is responsible for more than half the nearly-600,000 b/d cuts in the non-Opec side of the output deal. Its slow progress towards its full cut is the main reason behind a less than 50pc compliance rate among the 11 non-Opec countries in the deal.
Karimov's assertion relies on a selective reading of what Russia committed to under the deal. Energy minister Alexander Novak said Russia would gradually cut production to meet its target at some point in the second quarter this year. "According to our understanding, that cut of 300,000 b/d should be done sometime in April," Karimov said.
But Russia's gradual reductions are a unilaterally declared position, at odds with the agreement's start date in January. Russia's slow progress has caused friction among other countries in the deal, notably Saudi Arabia.
"We made clear we will not carry the burden of free riders," Saudi oil minister Khalid al-Falih said in Houston earlier this month.
Karimov's statement is likely to reflect a certain amount of posturing as participants consider extending the deal beyond June. Debate over exactly how compliant participants are has become muddied by pronouncements from the joint ministerial monitoring committee (JMMC). Saudi Arabia increased production by more than 250,000 b/d in February. And while it was still meeting its commitment, the output increase left Opec's overall compliance rate at 103pc last month, compared with 115pc in January. But the JMMC said compliance rose in February, raising questions about how exactly the success of the deal is being measured.
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