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Novak: oil-output cut agreement not to affect Russia’s long-term contracts

December 17, 2016, 19:09 UTC+3

"The companies are to regulate reduction in their other directions," Russia’s Energy Minister said

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MOSCOW, December 17. /TASS/. Agreement to curtail oil production reached by OPEC countries and 11 other oil producing states, with Russia among them, will not affect Russia’s long-term contracts on oil supplies sealed in intergovernmental agreements, Russia’s Energy Minister Alexander Novak told reporters on Saturday.

"The long-term contracts signed by companies and mentioned in intergovernmental agreements will not be subject to this reduction," Novak said, noting the agreements would be implemented in full as the amount of oil output cuts would be insignificant.

"The companies are to regulate reduction in their other directions," Novak said.

On December 10, OPEC and non-OPEC countries signed the agreement on joint reduction of oil output at a meeting in Vienna on December 10. Also, 11 countries will join the announced cut by OPEC members of 1.164 mln barrels per day in the first half of next year, and reduce production by another 558,000 barrels per day. Thus, the total crude oil production cut will amount to 1.7-1.8 mln barrels per day.

Russia plans to cut its oil production by 300,000 barrels per day in the first half of next year.

Novak said earlier that the companies which account for 90% of oil production in Russia had confirmed their readiness to voluntarily cut their output in the first half of 2017 in proportion to their shares as compared to October 2016. The monitoring of oil production cut will be conducted twice a month. According to the minister, the cut will be in proportion to the volume of production of the companies - "terms are equal for everyone". By the end of April Russia plans to enter the target of oil production cut of 300,000 barrels daily.

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