The Minister of Qatar oil Mohammed al-Sad (center), Minister of petroleum and mineral resources Saudi Arabia’s Ali al-Naim (left) and Russian energy Minister Alexander Novak (right) at a press conference in Doha, February 16, 2016
The Russian energy Minister Alexander Novak agreed with Saudi Arabia, Qatar and Venezuela to freeze oil production at the level of January. The agreement is realized only if it is supported by other manufacturers
What is decided at a meeting in Doha?
On Tuesday, 16 February in Doha, met the Russian Minister of Energy Alexander Novak with representatives of the three countries of OPEC – Minister of Petroleum and Mineral Resources of Saudi Arabia Ali al-Naimi, oil minister of Qatar, Mohammed al garden and the Minister of petroleum and Mines Eulogio del Pino Venezuela. Following the meeting, the four countries Inform us about readiness to freeze the production of oil in 2016 at “January 2016″, when other manufacturers join this initiative. This was reported by Novak. According to Al-Naimi, a frost is expected at January 11. Then may follow the following steps to stabilize prices “in the next few months».
The representative of Venezuela, Iran and Iraq are set to meet on Wednesday in Tehran, he told the news agency Sputnik representative of the Iranian oil company NIOC. However, Iran is not going to reduce its market share, he said the agency Shana Oil Minister Bijan Zanganeh this country. Iraq is ready to freeze the production of oil at the January level, if such an agreement will be concluded other major oil producers, told Reuters a source in the Iraqi Ministry of Oil. Bloomberg Source Agency in Kuwait said that the OPEC member also agrees to freeze oil production at the level of 3 million barrels. per day.
What is this agreement for Russia?
So far, nothing. A source in one of the major oil companies told RBC that is selected is very good date for freezing production. “January 11 was one of the highest production levels in order to keep it, do not exert too much” – he said. According to the International Energy Agency (IEA), the largest producer among OPEC countries – Saudi Arabia was producing 10.2 million barrels in January 2016. in the day: a little less than at the peak in June 2015 – 10.5 million barrels. per day. Russia produces about 10.9 million barrels. per day in January, a record in the post-Soviet era. If production in 2016 will be an average of the level of January, it will amount to a record 552 million tonnes (was 534 million tons in 2015).
Russia and Saudi Arabia are close to historical production highs, says analyst Gazprombank Alexander Nazarov. “According to the central dispatching management of fuel and energy, we have in January was a historical record, that is, production is already at the maximum. Now the critical reaction of other producers who did not participate in this meeting, but the participation that called – is Iraq and Iran. That they planned to increase production this year, “- indicates expert
« Arrangements -. It’s baby steps, especially when you consider that OPEC could not agree on the establishment of even a nominal ceiling [production] at a meeting in December – says the deputy director of the department of news and analytical information on the oil markets in Europe and Africa Gender Hikin Platts. – The situation remains deadlocked, and still [Saudi Arabia and Russia] will be very difficult to reduce production because other manufacturers are not going to subsidize the additional barrels from Iran. ” It is only on the current production level of freezing, but not cut, that is, the excess of which is now on the market – 1.5 million barrels. day, will, adds senior analyst on oil and gas sector, “Aton” Alexander Kornilov.
How it will affect oil prices?
In the news on Russian negotiations and three OPEC price for Brent crude on the ICE exchange rose by almost 6.5%, to $ 35.54 a barrel. But then began a correction, as of 19:00 MSK prices fell 2% to $ 32.7 per barrel.
Oil prices in the short term will continue to fluctuate at low elevations, says Professor Israeli University. Yossi Bar Ilan Mann. In his view, the stability of the agreement may depend on the situation in Syria, where Moscow supports President Bashar al-Assad, and Riyadh – his opponents. “Traders do not trust the information on the agreement between OPEC and other exporters – they have heard of such agreements many times, but nothing in the end did not happen,” – concluded Mann
I wonder how to behave like the US, where it can be activated. extraction of shale oil with an increase in prices, for example, up to $ 40 per barrel, adding Sberbank CIB analyst Valery Nesterov. Today’s decision is short-term consequences for the market, and too early to say that the process of price recovery began, the expert concludes. “If there is a decision to reduce production, it will be very effective for the oil market as a whole and for the Russian budget, – says senior analyst at UBS Maxim Moshkov. – The meeting in Doha was unexpected, so waiting for real solutions to the price grew, but because they are not adopted, the price again dropped »
According to the chief economic forecasting expert of the Center of Gazprombank Yegor Sucina, if there is no production growth. in the US and increase exports, to the middle of the year it can be a balance between supply and demand. “In this case, the price of oil could reach $ 40-50 per barrel”, – the expert said in an interview with RBC
What react Russian oil.?
On Tuesday, Russian oil companies are reluctant to comment on the agreement with the Ministers of the three Novak OPEC countries due to lack of parts. “We do not know the terms, do not know under what conditions agreed to freeze production of Russia, did not know that the other market participants”, – said RBC’s press-secretary of “Rosneft” Mikhail Leontiev. “We have repeatedly expressed our position: the configuration of the interests and positions of market participants such that the grounds to ensure that was reached some agreement, we do not see”, – he added. The volume of production is determined by the economy only to the company’s projects and the availability of technological solutions, said a source in LUKOIL. The issue of forced reduction of production will be considered only on the condition that the reference to “go to the top,” he said.
As an agreement Russia and OPEC affect the ruble?
About the trip to Doha Novak said on the eve of the agency Bloomberg, in anticipation of the reduction of oil production making the ruble strengthened (to 23:40 dollar lost 1.05 rubles., Going down to 76 95 rub.). At the beginning of the trading session on the Moscow Stock Exchange February 16 ruble began again to lose ground against the dollar – from the beginning of the day the dollar rose by 73 kopecks to 77.64 rubles.. “Alluding to the decline in oil production market is not heard,” – says an analyst at Nordea Bank Dmitry Savchenko. “The players are disappointed with the results of the meeting of the OPEC countries, and continue to buy dollars against the ruble,” – said the trader, “Renaissance Capital” Levon Atanasyan. Some analysts do not exclude the strengthening of the ruble in the medium term. “Stabilization of the level of production may lead to an increase in oil prices to $ 40 per barrel, which will allow the ruble strengthen to 72-74 rubles. for dollar “, – does not exclude senior analyst Promsvyazbank Dmitry Gritskevich. According to him, this will happen if other manufacturers will join this initiative.
How to negotiate with Russia before the OPEC?
There is a story not very productive OPEC and Russia cooperation in the past, as well as an extensive history of non-compliance with the agreements on the various constraints on production (quotas) and technical difficulties to monitor the implementation of these agreements in the most OPEC recalls Nesterov. In 1999, against a background of falling prices to $ 10 per barrel, Russia, OPEC and joined them Mexico, Norway and Oman have agreed to reduce the total oil production by 2.1 million barrels. per day. Moscow then took the obligation to reduce production by about 100 thousand. Barrels. per day, about 7% of the production. But, as pointed out last week, the experts of the Oxford Institute for Energy Studies, Russia has not fulfilled his promise: According to BP, its production for the year rose only from 6.17 million to 6.2 million barrels. per day.
The same agreement was reached between Russia and OPEC in 2001, when oil prices fell from $ 36 to $ 20 per barrel. OPEC has committed to cut output by 1.5 million barrels. per day, but do his cartel agreed, only if it is not included in the country – oil producers would go to reduce its production by 500 thousand barrels.. per day. Moscow then agreed to reduce output by 150 thousand. Barrels. per day, it had to take place in two stages. However, researchers from Oxford noted, while Russian production is also only increased – by 300 thousand barrels.. per day.
In 2008-2009, OPEC and Russia have tried to co-ordinate production cuts amid falling cost of a barrel of oil from $ 147 to $ 39 in six months. The then Deputy Prime Minister Igor Sechin even came out with an initiative to bring together all the countries – producers of oil, OPEC offered the mechanism of regular contacts to exchange analytical information. Then, however, OPEC countries did not accept this proposal. The Russian proposal on the world oil market has increased by 700 thousand. Barrels. per day.
The very even OPEC in 2011, setting quotas for its members at the level of 30 million barrels. in a duck, but this limitation for several years is not respected – in fact, the cartel members is produced 31.5 million barrels. per day. At the last OPEC meeting in December 2015 there was no decision on the new quota, but on rumors that it will rise to the actual level of oil prices has once again collapsed.
the 13 countries included in the OPEC oil-producing; largest – Saudi Arabia, Venezuela, Iran and Iraq. The total production of OPEC countries grew throughout 2015: the average production for the year grew to 31.85 million to about 32.2 million barrels. per day, according to the cartel’s . Statistics for the first month of this year shows that the increase in the production countries – members of the cartel continued in January as compared to December last year, it grew by another 130.7 thousand barrel .. per day. Saudi Arabia, which accounts for about a third of all OPEC production by the end of the year, on the contrary, slightly reduced production in January this year it was producing an average 10.09 million barrel . per day, from the data of OPEC
Total production from countries outside OPEC. (the largest of them – Russia, the United States and Mexico), in the course of the year growth did not show, and fluctuated at a level of 57 million barrels. per day. Russia, by contrast, has increased production from 10.74 million to 10.88 million barrels during the year. per day.
With the participation of Alexander Artemyev, George Peremitina, Alberta Koshkarova
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