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Novak says oil companies to reduce oil production in proportion with their shares

December 14, 2016, 14:50 UTC+3
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MOSCOW, December 14. /TASS/. The companies that produce 90% of oil in Russia confirmed oil output cuts in the first half of 2017 and will reduce oil production in proportion with their shares, Russia’s Energy Minister Alexander Novak said on Wednesday.

"We held a meeting with 12 companies that produce 90% of oil in Russia. The companies once again confirmed their commitment to the agreements reached in Vienna. During the first half of the year the companies will gradually reduce oil production against the October levels, we will monitor the situation. The total volume of production by the end of the first quarter will decrease by 200,000 barrels, in the first half of the year we will reach 300,000 barrels in accordance with our obligations," the minister said.

The minister noted that the implementation of the Vienna agreement will take place on a voluntary basis. "We will establish a working group at the Ministry for monitoring companies’ voluntary commitments," he said. He said that the monitoring group will include representatives of companies.

Lukoil CEO Vagit Alekperov said earlier that the company is ready for reduction of oil production in Russia to the level required by the agreement of OPEC and non-OEPC countries.

The company’s Vice President Leonid Fedun said earlier that Lukoil expects that the Russian government will pay compensation to major oil companies due to reduction of oil production.

On November 30, OPEC countries agreed to cut oil production to 32.5 mln barrels per day, which means those countries will reduce their daily average output by 1.164 mln barrels starting January 1, 2017. Now OPEC will have to make a similar deal with non-OPEC members. The cartel expects them to cut crude production by 600,000 barrels per day in 2017, including a reduction of 300,000 barrels per day by Russia.

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