Nigeria and Libya should join the deal to cut global oil production agreed by OPEC and Russia as soon as their output stabilises, Alexander Novak, Russian energy minister, has said, reports FT.
Producers are battling to prop up crude prices that have sagged on fears that the deal’s effectiveness is fading.
Russia, Saudi Arabia and other OPEC members agreed late last year to reduce production, in a bid to prop up the market.
But the impact of the cut has been reduced in recent months by a dramatic recovery in production from OPEC members Libya and Nigeria, which were exempt from the deal at the time because of supply disruptions, as well as a rebound in the US shale industry.
“I think that these countries should join other responsible oil producers and contribute to the market stabilisation initiative as they reach a stable level of output,” Novak said, ahead of a meeting in St Petersburg with other OPEC energy ministers today to discuss the agreement.
“We believe that once oil output in Libya and Nigeria stabilises, there will be less uncertainty on the market as to their future moves,” Novak said.
The comments are a potential sign that frustration is growing in Moscow over the increased production by the two OPEC members, and suggests that Russia may be looking to Saudi Arabia to put pressure on them to pare back output.
Novak added that the countries which had agreed to take part in the production cut agreement “have been very assiduous in honouring their commitments”.
While not an official OPEC meeting, the St Petersburg gathering of six ministers from key countries taking part in the deal to cut production will assess its impact and effectiveness. Nigeria and Libya are on the agenda, Novak said on Sunday.
The agreement to collectively reduce output by 1.8m barrels per day initially boosted the price of oil. But Brent crude is down by about 13 percent so far in 2017, partly because of increased production from the two African countries, and a resurgent US shale industry.
Saudi Arabia is considering a unilateral 1m barrel per day cut to its exports as one of several options it could use to offset the increased production elsewhere, a veteran oil consultant said last week, citing sources both inside and outside the cartel.
The move is a sign of how much pressure Riyadh is under to keep the agreement together and restore its effectiveness.
Separately, Novak told the FT that Russia was keen to continue deepening its blooming partnership with Saudi Arabia’s energy industry.
“Russian and Saudi companies are exploring opportunities in both oil and gas sectors,” he said. “We also remain proactive in our dialogue with our Saudi partners on technology co-operation between our countries.”
Areas of co-operation that are “promising” include the design of technology for oil and gas extraction, and the joint production of oil and gas equipment to be sold to third states, he said.
The two countries, which brokered the production cut deal and are crucial to its continuation, are also discussing ways to promote Russian services and drilling companies in Saudi Arabia, Novak added.
