Moscow. 11 Dec. Eleven countries outside of OPEC will reduce oil production from January 2017 on 558 thousand barrels per day. This decision was reached following the talks, OPEC and outside the cartel to reduce output of oil which took place in Vienna Saturday, December 10.
The reduction will begin in January. Most countries outside of OPEC will reduce oil production from the level reached in September-October.
Half of the volumes, the planned reduction in countries outside of OPEC, takes on the Russia – 300 thousand barrels a day. Russia plans to reduce oil production to the level of 10,947 million barrels per day. According to Russian energy Minister Alexander Novak, the production is to be reduced from the level of October, when, according to CDU TEK, Russia won 11,247 million barrels per day.
The Minister of energy, industry and mineral resources Saudi Arabia Khalid al-falih as a future President of OPEC said he will do everything possible to all the countries in the cartel are fully complied with an agreement to cut production. And the Ministers of Russia and Qatar urged to join the decline, more and more countries outside of OPEC.
The meeting in Vienna was attended by representatives of 24 countries. The Presidium of the hall sat the head of the energy Ministry of Russia Alexander Novak, OPEC Secretary General Mohammed Barkindo, the oil Minister of Qatar Mohammed bin Saleh al-Sada and Minister of energy of Algeria, Nureddin Boutarfa. Oil Minister of Qatar in his introductory remarks thanked Novak for his contribution to consultations between the OPEC and outside the cartel. The negotiations lasted for several hours.
Initially, the market focused that countries not members of OPEC agreed to reduce production by 600 thousand barrels per day. This figure was called after a meeting of the OPEC where the decision was made to cut production by the cartel at 1.2 million barrels per day – up to 32.5 million
For Saturday, the sources are different, the media reported that non-OPEC countries would be willing to reduce production to more than 600 thousand barrels per day. However, the final agreement – a reduction of 558 thousand barrels per day – has been scheduled below. But these numbers have caused only the most positive comments of the participants of the negotiations.
When it became officially known that the participants of Saturday’s talks in Vienna were still able to reach agreement, the Minister of Saudi Arabia stated that the agreement to reduce oil production in OPEC and outside the cartel is historical. “This agreement is historic not only in its impact, bringing market stability and reducing the volatility of the market, helping to attract investment. This is a historic agreement for the number of countries that are involved and by OPEC and non-OPEC countries,” he said.
Khalid al-falih emphasized that OPEC will meet its obligations to reduce oil production in accordance with the agreements. “I as a future President of OPEC, as the Minister of energy of Saudi Arabia would like to say with complete certainty, with absolute certainty that starting in January 2017, we will significantly reduce production in order to ensure the production level is lower than the one we agreed on 30 November,” he said.
“I am confident that we will comply with all the commitments. I want to assure you that Saudi Arabia, for its part, it (the reduction) will do. I, as a future President of OPEC, will do everything possible to OPEC fully complied with the agreement”, – said the Minister.
“Of course, this agreement is open for other countries that are not members of OPEC”, – said the Minister of energy of Qatar Mohammed al-Sada. Russian Minister Novak also said: “We agreed that it’s not a closed agreement. It can join and other countries. Doors open and can continue to work in order to attract other market participants exporting to this agreement in order to stabilize the market.”
The agreement to reduce oil production was attended by 11 countries outside of OPEC. Azerbaijan, Bahrain, Brunei, Equatorial Guinea, Kazakhstan, Mexico, Oman, Russia, Sudan, South Sudan, Malaysia.
The Ministers some of them immediately commented on the plans of their countries.
Mexico is the second largest reduction after Russia. As part of the transaction for the reduction of oil production between OPEC and non-OPEC, Mexico will reduce its production by 100 thousand barrels per day, said Minister of energy of Mexico Pedro Joaquin Caldwell. According to him, Mexico will reduce production with an expected annual average increase of production levels at 2,159 million b/d. the Reduction will be valid for six months.
The Minister of energy of Azerbaijan Natig Aliyev positively assessed the results of the meeting, the statement of the Ministry of energy of the Republic. “Aliyev stated that the meeting was held in a positive way, OPEC and non-OPEC agreed on a Declaration on cooperation”, – stated in the message. According to the agreement, Azerbaijan will reduce its own oil production by 35 thousand barrels per day, Russia – 300 thousand barrels.
Kazakhstan expressed willingness to cut oil production by only 20 thousand barrels/day due to the start of production from Kashagan partners from OPEC and non-OPEC understand the situation, said the Minister of energy of Kazakhstan Kanat Bozumbayev.
Oman will reduce oil production to 40 thousand barrels per day.
Russia and Oman will join the Committee to monitor the conditions of execution of the transaction by the reduction of oil production. By OPEC in the Committee have already entered Algeria, Kuwait and Venezuela.
The Russian approach
Russia reaches the level of decline in oil production of 300 thousand barrels per day in April-may, told reporters the Russian energy Minister Novak.
He noted that no penalties to companies that do not fulfill the agreement or will not cut production, is not provided. “It is voluntary, all agreements are, and adjust plans for companies, this is also primarily the company’s decision,” the Minister said.
Novak did not say, how will the reduction of oil production in the whole year, expressing the view that “with respect to those plans that have been or are companies, there will be some contraction.” “We’ll give you more exact numbers after work out final schedule,” the Minister said.
The Minister also said that next week will hold a meeting with oil companies to discuss the details of the reduction of oil production. “We discussed previously (mechanism of reduction of production companies-if), but given today’s meeting with OPEC and non-OPEC, and we’ll meet again finally talk,” he said.
“The most viable option is to on the numbers, which is necessary for reduction will be proportional to (between companies) decrease relative to the production level”, – said Novak.
He noted that the country will be created by the monitoring group, which will include representatives of oil companies. “Most importantly, the whole country observed some decline in production,” he added. “This is a complex mechanism(…) We live in a constant mode of monitoring and decision making together with companies in the framework of the monitoring group,” – said Novak.
Earlier it was reported that OPEC agreed to cut oil production by 1.2 million barrels to 32.5 million barrels per day. In the end, the global reduction of oil production in OPEC and outside the cartel will reach 1.7 to 1.8 million barrels per day, said Minister of energy of the Russian Federation.
“OPEC confirmed that the agreement between them will be a reduction of 1.2 million bar./day, that will give a total reduction of almost 1.7-1.8 million bar a day,” he said.
Novak also stressed: “the agreement signed Today will provide stable work of the industry. Our actions take place in the interests of consumers and producers of oil.” The rebalancing of the oil market in the implementation of the agreements may occur in the third quarter of 2017, he said.
The Minister of energy of Saudi Arabia believes that oil production from mid-2017 may be regulated naturally without the extension of the agreement. “In the middle of the year we with the ideal return in the fact that everyone will produce as much as you wish, and we will not all the time these limits are set,” said al-falih. However, it is not excluded that the situation will be bearish and production cuts are needed again.
Oil prices after the start of reduction of production will be determined by the market, the Minister said Saudi Arabia. “With regard to the quotes that this is not a direct objective of this agreement. We have no such ideas. Prices will be determined by the market. Prices should be attractive enough to attract investment and ensure the balancing market. I think the current prices will remain for the long term,” said al-falih.
The overall situation in the world economy and on world oil markets will be next year better than in 2016, he said. “We see changes in the global market. Next year will be better situation. Developing countries need more oil. The demand for oil tells us that the economy is recovering, that the countries develop. I think the next in 2017 will be healthy economically,” the Minister added in Saudi Arabia.