Russia Rules Out Coordination With OPEC

Russia Rules Out Coordination With OPECRussia Rules Out Coordination With OPEC

Russian Energy Minister Alexander Novak said in a statement he has ruled out possible coordination with OPEC on oil output after a failed attempt to jointly maintain production levels earlier this year.

"We do not discuss the issues of coordination of actions between Russia and OPEC ... We cannot agree on production cuts as we do not have such tools and mechanisms," Novak told Reuters in an interview.

The Organization of Petroleum Exporting Countries and other big oil producers, including Russia, were not able to reach a deal in Doha in April on freezing oil production in order to support falling oil prices.

Global crude oil prices reached a 13-year low of $27 per barrel in January due to oversupply, but have recovered since then to around $50.  The weak price for oil, Moscow's chief export commodity, hit the Russian economy, which shrank by 3.7% last year.

Novak said Russia sees its cooperation with OPEC focusing on the exchange of information and analysis on the global oil market, rather than on coordinating production.

Russian companies have been increasing oil production this year. Novak said he expects domestic oil output at 542-544 million tons this year after it hit 534 million tons (10.73 million barrels per day), a 30-year high, in 2015.

Meeting With Saudis Planned

Novak said he will likely meet new Saudi energy minister Khalid al-Falih at a conference in Algeria at the end of September. It will be their first meeting since Falih was appointed in May, taking over from veteran minister Ali al-Naimi.

"Obviously, we will discuss the situation on the global oil market," he said, adding that they will also look into the possibility of joint energy projects in Russia, Saudi Arabia and third countries.

Novak said Russia is sticking to its forecast that the oil price will average between $40 and $50 this year.

The Russian minister said he expected global oil markets would balance out by mid- or end-2017, with a lot depending on Saudi Arabia's policy.

Novak added that global oil stockpiles have reached 3 billion barrels, of which 500 million barrels he called "excessive" and warned that it will take a long time before they leave the market.