Russia to agree with OPEC on oil

Russia to agree with OPEC on oil

Russia is ready to participate in consultations with member states of the Organization of Petroleum Exporting Countries (OPEC) on the situation on the world oil market. This was announced today on the sidelines of the International Investment Forum 'Sochi-2015', Russian Energy Minister Alexander Novak stated.

"There are proposals from some of the OPEC countries, as well as some oil-exporting countries that do not belong to OPEC, to discuss the situation in the oil market at the level of experts. We are ready to participate in such consultations. In May, such consultations were held in Vienna, if there will be new proposals, Russia is ready to participate in them "- he reported.

We recall, that on July 30, Moscow hosted the fourth meeting of the energy dialogue 'Russia - OPEC' with the participation of Novak and OPEC Secretary General Abdalla Salem El-Badri. During the meeting, parties have not discussed the issue of coordination of pricing policy and volume oil production. After the meeting, Russian Minister stated that the reduction of production in the regulatory mode is actually very difficult for Russia, most countries do not consider it necessary to do it in the manual mode. Currently, the total quota of oil production by OPEC countries is set at 30 million barrels per day by cartel decision, but this level is periodically violated. Another meeting of oil ministers of OPEC countries is scheduled for December 4.

Speaking about oil production in Russia in 2017, Novak pointed out that in case of freezing of reduction of the export duty, which is proposed by the Ministry of Finance, it will drop by 7-10 million tons. "We carried out calculations with the participation of our companies about which effects will the industry get from this idea of the Ministry of Finance. Oil production - minus 278 billion rubles, the withdrawal of cash flow, for oil refining - plus 70 billion rubles. In total, it will amount to about 208 billion rubles. Oil refining is going to win a little," - he noted.

"We estimate that during the withdrawal of not 600, but 300 billion rubles from the oil and gas industry, next year, the production volume will be reduced by 7-10 million tons," - Novak said. According to the results of this year, Russia produced about 527 million tons of oil and refined about 290 million tons. "We collected data from companies, from 6.5 thousand oil wells, about 2 thousand will not be drilled in 2016. If you count, this is the decline in production and the decrease of the order for the drill of new oil wells," - he explained.

Minister reported, that the implementation of the Ministry of Finance proposal will mean that for the same amount, 300 billion rubles, oil and gas investment programs will be reduced. In spite of all these factors, the head of the Ministry of Energy expects that the proposed by the Ministry of Finance freeze of oil export duty for 2016 is still likely to be adopted.

In addition, the head of the Energy Ministry stressed that the decision on the adjustment of the tax legislation for the oil and gas sector should be accepted on the budget committee, which will be held on October 7. "The decision has not been accepted yet, the budget commission will be held on October 7th. This budget Commission will make all decisions, "- he said. "There are discussions with the Government about the fact, that any changes in tax legislation will negatively affect the industry. Just at the beginning of the year we made changes to the legislation, the tax maneuver", - he said.

Regarding Russian energy strategy until 2035, according to Novak, it has to be corrected, if the Ministry of Finance proposals on the growth of the tax burden on fuel and energy complex (FEC) will be accepted. "If the ideas of the Ministry of Finance on the change of tax laws will be approved, we will have to adjust the parameters of the energy strategy until 2035. We will have to adjust the strategy because it is based on other financial conditions", - he noted.

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