No Sign of Russia-OPEC Deal

No Sign of Russia-OPEC DealNo Sign of Russia-OPEC Deal

As Russian Energy Minister Alexander Novak flies to Algeria for talks with OPEC on output cuts, developments at home indicate Russia is still ill prepared for any coordinated production action with the Organization of Petroleum Exporting Countries.

Five leading Russian oil companies, responsible for three quarters of output in the world's largest producer, all say they will be boosting output next year after reaching record levels in recent months, Reuters reported.

These companies would obey if President Vladimir Putin ordered them to curtail production, but so far Putin has had no meeting with leading Russian oil producers—state-owned or private—and even the energy ministry has yet to hold such consultations to sort out details and logistics of any output action.

"We think that it is impossible to agree ... No one trusts anyone; everyone has been just ramping up production (within OPEC and outside)," a source at Russia's leading oil producer, Rosneft, said.

Kremlin-controlled Rosneft, which accounts for over a third of Russian production, has been the biggest opponent of the global oil freeze deal since it was first discussed at the beginning of the year.

Rosneft chief Igor Sechin has said internal differences were killing OPEC and its ability to influence the market.

The Rosneft source said the firm's position has not changed despite the latest developments, which even saw Putin meeting Saudi Deputy Crown Prince Mohammad bin Salman in China in early September and the country's ministries agreeing to work together to help stabilize oil markets.

The Russian oil landscape is also dominated by No. 2 firm, private Lukoil, private producer Surgut, state-owned GazpromNeft and Tatneft.

The companies plan to raise production by around 1.6% on average in 2017, according to their forecasts and Reuters calculations as they benefit from a weaker ruble and cheaper costs at home.

The Russian Energy Ministry has itself delivered contradictory statements over the past week with Novak saying he was still supporting a freeze but swiftly denying his deputy Kirill Molodtsov's remarks that Russian could in theory cut output by up to 5%.