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Russia close to agreement with partners on freezing oil production — Putin

March 01, 18:00 UTC+3
According to Putin, both fundamental and speculative factors are influencing the oil prices
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© Mikhail Metzel/TASS

MOSCOW, March 1. /TASS/. Russian business agrees with the idea of freezing the level of oil production as Russia virtually agreed on it with international partners, Russian President Vladimir Putin said Tuesday at the meeting with oil industry representatives.

"He [Russian Energy Minister Alexander Novak - TASS] conducts negotiations on the matter [freezing oil production - TASS] and has almost reached an agreement with partners in the global market," Putin said.

"And as the minister reported, you all agree with this. Some have even more radical proposals," he added, referring to the meeting attendees.

Putin noted that consultations of the Russian Energy Ministry with foreign partners on stabilization of oil prices continue. "The idea is that this year we will not increase oil production," Putin said.

Putin said that Energy Minister Novak earlier told him that Russian business is ready to freeze the volume of oil production. "The purpose of our meeting today is that I would like to personally hear it from you - do you really support such a proposal from the minister, how do you feel about that?," the President said.

Speculative and political risks influence oil markets

According to Putin, both fundamental and speculative factors are influencing the oil prices. The national oil sector is developing and it is important to keep this trend, the president said.

"We see how unstable the global hydrocarbons market is. It is affected by both fundamental economic factors, I mean the slowdown of economic growth in the first instance, and by speculative items," Putin said. "All that influences the market, certainly including political risks as well," Putin added.

At the same time, Russia's oil industry showed a steady development in 2015, he said. "Overall, in 2015, the Russian oil industry showed that it was developing steadily. Last year, record-breaking 534 million tonnes of oil was produced, which is a 1.4% increase in comparison with 2014," Putin added.

The greater portion of oil produced in Russia is supplied to domestic oil refineries, the head of state said. "More than a half of total oil produced in Russia is supplied to domestic refineries and is used to make products with high added value. Feedstock conversion rate is growing," Putin added.

The president called to maintain stability and sustainable development of the Russian oil sector. "Our task is to preserve stability of the Russian oil industry, ensure its sustainable development and implementation of long-term projects," Putin said.

Government decisions in oil industry

Putin marked the positive role of government decisions to stimulate oil production in Eastern Siberia, the Far East region and offshore, as well as on development of deposits with hard recoverable reserves. He also noted the improvement of the environmental situation in the industry.

In particular, since 2012 the share of associated petroleum gas utilization increased from 76% to 88%. "This is certainly a very good indicator," the head of state said.

Putin also recalled that in 2015 the volume of Russian oil exports increased and amounted to over 241 million tonnes, which is 9% more than in 2014.

Speaking about the dynamics of oil prices, Putin said that in 2015 Urals blend price plummeted by about three times.

"This is a significant drop and a significant blow to the company's revenues," - he said.

The President noted that despite this, the capital expenditures of Russian oil companies in the oil production in 2015 were 7.8% higher than in 2014.

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