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Gazprom speaks out against OPEC production cut extension

23 November 2017
Consumers
energynomics

While OPEC is said to be mostly leaning toward a 9-month extension of the production cuts, Russia’s Energy Minister Alexander Novak and major Russian oil companies discussed last week a six-month extension after March 2018, and all but one company said they were ready to extend, Russia’s TASS news agency reported on Tuesday, quoting two sources who had attended the meeting.

A possible six-month extension proposal from Russia is shorter than the market is largely expecting—nine months through the end of 2018. It could also put Russia on a collision course with Saudi Arabia, its key partner in the OPEC/non-OPEC deal to curb production to erase the glut and prop up oil prices.

In early October, Russia’s President Vladimir Putin said that Russia was open to extending the production cut deal, but echoed other officials’ comments at that time that it was too early to decide.

“If we speak about a possible extension, then of course, it should be at least until the end of 2018,” Bloomberg quoted Putin as saying at an energy forum in Russia, according to oilprice.com.

But a month and a half later, with Brent trading above $60 for more than three weeks, there is growing talk and speculation that Russia might walk away from the deal, or try to stall either the taking and/or the announcement of the decision, because it doesn’t see such announcement as urgent as possibly many of OPEC’s producers.

“Extending the deal was discussed. Everyone except Gazprom Neft agreed, because the company will launch new projects in 2018,” one of TASS sources said, adding that Rosneft—the biggest Russian oil producer led by Putin’s close ally Igor Sechin—did not voice disagreement over extending the cuts.

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