According to the Moscow Times on November 20, a source said that Russia is unlikely to agree to further cut oil production at a meeting with other oil exporting countries next month, but may commit to extend the existing production reduction agreement to support Saudi Arabia.
On December 5, OPEC will hold a meeting at its headquarters in Vienna, followed by talks with other oil exporting countries, including Russia.
Also on December 5, Saudi Arabia will announce the public offering pricing of its energy company, Saudi Aramco, which it hopes will be the world’s largest initial public offering, and the oil price on that day may be crucial to the pricing of the offering.
OPEC and its allies are worried about weak growth in oil demand in 2020, the source told Reuters. Russia set the tone for the December talks last week, saying Saudi Arabia’s position before the talks was “tough,” the Moscow Times reported on November 20.
Moscow says it’s hard to cut oil production in the cold winter, especially in western Siberia, where two-thirds of Russia’s oil comes from and most of its rigs are located.
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Experts say there could be an explosion if the well stops working under freezing conditions. However, at extremely low temperatures of minus 50 degrees Celsius, it may lead to involuntary production reduction.
“It’s hard to predict how much the December talks will go on,” said one person familiar with the matter. Russia will definitely not agree to (further) production reduction in winter. ” The oil ministry did not respond to requests for comment.
However, there is still the possibility of “surprise”. In the latest round of negotiations, OPEC, Russia and some other large oil producing countries have agreed to cut their daily oil production by 1.2 million barrels from January 1, 2020. The agreement will last until the end of March. “Formal negotiations have not yet begun, and the results may be reversed,” the source said. Although Russia cannot cut more oil production in winter, accidents are always possible. ”
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Russia’s oil production increased to 11.25 million barrels a day in November, failing to meet its production quota target. According to Reuters calculations, combined with agreements with OPEC and non OPEC oil producing countries, Russia’s daily oil production should be controlled at around 11.17-11.18 million barrels.
Russia will start supplying natural gas to China next month, which will also increase the country’s condensate production.
Another industry source said Russian companies were seeking to increase production in 2020 to support the national budget.
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