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Russia does not expect Iran sanctions lift to have strong influence on oil prices

July 17, 2015, 11:07 UTC+3 MOSCOW

Alexander Novak said that Iranian oil volume entering the global market would require a redistribution of quotas by OPEC

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MOSCOW, July 17. /TASS/. The Russian Energy Ministry does not expect to see a big impact of lifting the sanctions against Iran on oil prices, Energy Minister Alexander Novak told journalists Friday.

"There won’t be a strong influence; the market has already evaluated it long ago. The prices will be formed from the cost of shale oil," he said.

The Minister explained that at the current oil price of $60 per barrel the decline in the number of drilling rigs slowed down. At a price above $60 rig count will increase. "We see today that the decrease in the number of drilling rigs slowed down and remains at 650 units of oil shale in the United States. It went down from 1,600 to 650 and no longer falls. Actually, this is the criteria," Novak said.

Novak added that Iranian oil volume entering the global market would require a redistribution of quotas by OPEC. "If the Iranian oil enters the market, it will create an additional supply. We should understand what OPEC is going to do. OPEC has to react somehow, they allocated quotas without taking into account Iranian oil, and they will have to reallocate it," the Minister said.

Iran and the six powers have agreed on comprehensive plan of action consisting of a text and five annexes on July 14.

Russia to offer Iran participation of Russian companies in Iranian oil and gas projects

According to the minister, Russia intends to discuss with Iran the participation of Russian companies in oil and gas projects in Iran, after the international sanctions against the country are lifted.

"Now we can discuss the prospects of the development, taking into account that the intergovernmental commission will be held in autumn. We are going to come with these proposals, Iran, I think, will too," he said.

Novak noted that choosing the specific projects will depend on conditions that the Iranian side will use as regulatory requirements.

"Our companies are ready to participate. There is a quite low production cost, good projects, so our companies would resume cooperation," Novak said.

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