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Timeframe of new agreement on oil output may be reconsidered — Novak

The OPEC+ nations early on Friday agreed to cut oil production by ten million barrels a day in May-June
Russian Energy Minister Alexander Novak Sergei Bobylev/TASS
Russian Energy Minister Alexander Novak
© Sergei Bobylev/TASS

MOSCOW, April 10. /TASS/. OPEC+ may increase or decrease the timeframe of the new two-year agreement on cutting oil output, Russian Energy Minister Alexander Novak told Rossiya-24 television channel on Friday.

"We will have an opportunity to extend this timeframe. If the situation on the market improves faster, we will be able to decide to cease activities on restoring the market in shorter time," Novak said.

The OPEC+ countries discussed three options for the new agreement. "For one year, for three or for four years. We agreed that the timeframe is two years. This is the timeframe that is the most effective for the market, in order to send a signal that the countries are serious about taking measures to restore the situation on the market, to restore the balance of demand and supply," he added.

"Our companies are ready [to cut production], and we are in contact with the top executives of our oil companies," he continued. Novak added that the ministry though the companies would be able to take technological measures to attain the product cuts level required from Russia.

The minister stated that non-OPEC countries also agreed to cut oil output. "Today in the G20 framework, there were 20 countries that also participated, and many talked about measures that need to be taken in order to improve the situation on the market," Novak said.

"For example, Canada said that they will cut oil output by around 1 million barrels per day. The United States, Norway, Argentina and others said they would cut output as well. We think that in addition to 10 million barrels per day that OPEC+ countries agreed to cut oil output by, other countries that are not OPEC+ members will cut output by an additional 5 million barrels per day together," he added.

The OPEC+ nations early on Friday agreed to cut oil production by ten million barrels a day in May-June. Production cuts will be continued up to May 2022 but is smaller amounts.

Under the OPEC+ plan, each of the 23 member nations is to reduce output by 23% on that in October 2018. The exceptions are Russia and Saudi Arabia that are to equally cut production from 11 to 8.5 million barrels a day. The deal was not finally sealed because of Mexico’s position as it refused to cut production by 400,000 barrels a day, as it was supposed, and agreed to do it by only 100,000 barrels a day. Later on, according to Mexico’s president, the country agreed with OPEC+ and the United States that its daily production cuts would stand at 100,000 barrels a day while the United States would cut an extra of 250,000 barrels a day instead of it.

Online talks between G20 energy ministers continued through Friday. According to Novak, aggregate production cuts in the OPEC+ and some of their G20 partner nations could amount to 15 million barrels a day.