Print Details of the agreement on the reduction of oil production, the prospects of its extension and change of oil said Alexander Novak, Minister of energy of Russia.
energy Minister Alexander Novak in an interview following the meeting of Ministers of countries-oil producers in Vienna, said that the agreements reached will balance the oil market and make the industry attractive for investment. The issue of price rise was not discussed.
- What are the details of the agreement to reduce oil production?
- Today we signed an important agreement, in fact, the historical, and its essence is, in short, not to go into detail is that OPEC will reduce production by 1.2 million barrels per day, up to 32.5 million barrels from 1 January 2017.
Countries non-OPEC – 11 countries that have participated in the negotiations – took the load in stages: during the first six months to reduce the production by 558 thousand barrels.
Thus, the total reduction will be approximately 1750 million barrels which, in our view, should significantly affect the oversupply in the market and the balancing market. The second point is the duration of the agreement: the first half of 2017 with the option at the end of the first half to get together again and discuss the need and desirability of continuing the joint work in the second half.
Will also be created monitoring group, which will consist of 5 countries: three countries-OPEC members and 2 countries outside of OPEC.
the Russian Federation will be included in the monitoring group, in order to track the execution of the agreement. The purpose of the agreement in the first place – market recovery, with the exception of minimizing the volatility of the market, minimization of non-fundamental factors that are affecting the market, restoring the investment attractiveness of the industry, in order to ensure that the oil market is stably supplied and producers, and the country’s energy resources. It is in the interest not only of exporters, the agreement is in the interests of consumers, creates a stable base for energy supply.
- What countries, except Russia, will be included in a monitoring group?
- From the countries in OPEC that Kuwait, Venezuela and Algeria. Countries that are not members of OPEC, the Russian Federation will be also Oman. These 5 countries that will meet in January to assess the situation on oil production.
How long can be an agreement to limit the production? What are the prospects for its renewal in the future?
- Such agreements are concluded in the period of crisis, when it is necessary to take joint actions on emergency response that, in principle, this happened today: we signed the agreement. When the situation develops market character, here, these coordinating measures do not need to take, so we will monitor the situation. The agreement was concluded for six months. If it is expedient to renew it, the decision, I think that OPEC will accept. Importantly, during this six months the situation has evolved so that the agreement was executed.
We believe that all countries are set up in this vein. Many participants in the consultations, negotiations and on a press-conferences has declared that this is a very important event, this is very important from the point of view of the trust that arose between the countries-producers of oil in OPEC and non-OPEC. The atmosphere of goodwill and mutual confidence in the negotiation.
- What price of oil you project upon reaching stabilization of the market?
- Today we discussed this issue, and I want to note that today we have record stockpiles of oil and oil products in the world. The excess is more than 300 million barrels, and, of course, for the balancing market it is necessary that these balances are reduced at least to the average level over the past 5 years. Then we can say that the market has stabilized.
Calculations, which are now the countries discussed suggests that in the third quarter of the 17th year, in the fourth quarter of the 17th year, the balancing may occur during the implementation of the agreements that were reached today.
- How to change the price of oil, now there is an understanding?
- during Today’s talks, no one talked about the price of oil. Talked about the need to restore normal operation of the industry, the investment process in the industry.
Therefore, in my opinion, is the price, which today is at the level of $ 55 or maybe 60, is the price, totally comfortable for all oil producers. It allows to balance the interests of manufacturers and consumers.
- you Previously said that investment in the sector has declined due to the current situation and rebalancing of the oil market. When do you think level of investment will reach its previous levels?
- Indeed in the world today, investment has declined substantially. More than half a trillion dollars in the last 2 years neconventionala in the global oil industry. This creates huge risks of the prospective deficit. In the framework of volatility we made absolutely the right decision, in order to bring back investment in the industry. Most importantly here, it must be hard to talk about how the investment will recover quickly, in all countries the situation is something different, but most importantly, is restored to the investment process, and our companies, and companies that work in other countries will realize in the longer term, how to work the market. Such a mechanism will restore confidence in the sector, attraction of investments.
- How for the company to reduce its level of production or not yet?
- We are in constant contact with the leaders of our largest companies. The actions that the Ministry conducted in the framework of our relations with the countries of OPEC and non-OPEC, we previously discussed during the year. They are supported by our companies, and today, after the formal execution of agreements between the two countries we will also work with our companies to further meet and discuss the schedule for the implementation of these agreements. In my opinion, because the solution is supported, should not cause and will not cause any additional issues, problems, therefore, most likely, it will be a proportional decrease relative to the total of the numbers assumed by the Russian Federation.
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