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All countries observe oil output cuts agreement — Russian energy minister

January 22, 16:59 updated at: January 22, 17:04 UTC+3

Russia is cutting oil production twice faster than planned, Russia's Minister of Energy said

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Russia's Energy Minister Alexander Novak

Russia's Energy Minister Alexander Novak

© Alexei Druzhinin/Russian Presidential Press and Information Office/TASS

VIENNA, January 22. /TASS/. All the countries are observing the agreement on cutting the output, Russia's Minister of Energy Alexander Novak told a news conference on Sunday.

"As for the first part, the agreement's fulfilment - I can say, we see with satisfaction the successful implementation of the agreements and joint action of the OPEC and non-cartel countries for stabilizing the situation on the oil market," he said.

The oil production cuts deal must be implemented by 100%,  Novak said.

"We should proceed from the fact that the agreement will be completely implemented. If we speak about some lower percentage it will mean we are not set to implement this agreement. So, less than 100% is not acceptable, more than that - you are welcome," he told.

Member nations of the Organization of the Petroleum Exporting Countries (OPEC) and countries that are not member of this organization have reduced oil production by 1.5 million barrels a day, but these data include not all countries, Novak said.

"We don’t have data by all the nations. But the data we have indicate that oil output reduction in January is at least 1.5 million barrels a day. I would like to draw attention to the fact that these data include only countries we have information about, not all the signatories to the deal," he said.

Russia is cutting oil production twice faster than planned, Novak told.

"We have seen the statement made by Saudi Arabia’s minister claiming the country lowered the output bigger than the agreement reads," he said. "Russia observes its obligations quicker, and the cutting is almost twice quicker than planned initially.".

The ministers' committee for monitoring of the oil production cuts will have meetings every other month, Russia's Minister of Energy said.

"The ministers' committee will have meetings every other month, and prior to the next (in May) OPEC summit it will have two meetings," the minister said.

Participants in the meeting of committee monitoring cut in oil production say the market stabilizes, Novak said.

"Today, we have noted that the situation on the market is approaching the balance, the stock is lowering already," he said. "Most importantly - we can see stability and lower volatility.".

Many countries observe oil output cut obligations ahead of the plan, Russia's Energy Minister said.

"Many countries fulfil their obligations even quicker and in bigger volumes," he said.

All the countries that are signatories to the oil production cuts deal may reduce their oil production by more than 1.7 million barrels a day in January, Novak said.

"I think that statistics data for January will show more than 1.7 million barrels a day," he said.

Oil prices in 2017 are expected to stabilize a $50-60 per barrel, Novak said.

"The potential for price growth is exhausted. In general, the situation can be views as follows: oil prices are going to be from $50 to $60 per barrel," he said.

Investments in the energy sector are expected to have positive dynamics in 2017 thanks to the oil production cut deal, Russian Minister of Energy said.

"We expect that the year 2017 will see a positive dynamics and a growth of investment in the energy sector. The January indices are hinting at that," he said.

Cold weather has only partial impact on oil production reduction, what matters most are actions taken by companies, Russian Minister of Energy said.

"Cold air temperatures do have impacts on production cuts. But partially. The main factor is the actions of companies," he said.

According to Novak, there are no data on whether companies are redistributing quotas for oil production cuts among themselves. "We have no information about whether companies have any joint agreements. Now each company is working on its own reduction plan," he noted.

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