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Russian companies to pour over $22 bln into oil production in 2018

Russian refineries in 2018 will increase oil refining to 280-281 mln tonnes, according to the Russian energy chief

MOSCOW, April 6. /TASS/. Capital investments of companies in 2018 in oil production will amount to 1.3 trillion rubles ($22.48 bln), Russian Minister of Energy Alexander Novak told reporters.

"We focus on 1.3 trillion rubles ($22.48 bln) of capital investment by vertically integrated companies in oil production. Last year we had a very large increase of 10%, so maintaining this level would be a good figure," the Minister noted.

At the same time, Novak did not rule out that the volume of investments might be bigger. In 2017, the capital investments of vertically integrated companies amounted to 1.33 trillion rubles ($22.99 bln). In 2016 this figure reached 1.21 trillion rubles ($20.9 bln).

The Russian Ministry of Energy does not rule out the possibility of involving countries that do not export oil, but produce it, to participate in balancing the oil market. "Countries non-exporters that produce oil might be invited," he said.

Currently, a number of countries, in particular China, are among the world's largest producers of oil, but do not export it.

Novak also noted that the US shale companies are "unlikely to be involved in this process." At the same time, it was repeatedly reported earlier that OPEC was negotiating with the producers of shale oil.

In his speeches, OPEC Secretary General Mohammed Barkindo noted that all major oil producers in the world are fully responsible for the situation on the market. He also said that the production limiting agreement that includes 24 countries, both from OPEC and outside of the cartel, is open to new members.

Oil market balancing

All the countries that participate in the OPEC+ agreement to reduce oil production are in favor of continuing cooperation in balancing the oil market, Novak told reporters.

"I did not hear from a single minister who was against such cooperation," he said.

The Minister also noted that the future of the OPEC+ deal after 2018 is possible in the framework of both information exchange and active participation of the countries in the market balancing.

"Both cannot be ruled out. In general, if necessary, there is an instrument to influence the market balancing swiftly, for example, in the event of a crisis that has occurred since 2014. At the same time, it is very effective to simply to meet and discuss the situation in the markets, in order to understand better the current situation and prospects for the future. Earlier OPEC worked in isolation, now 11 other countries have joined. This is already some kind of international organization," he said.

Novak also said that the Energy Ministry did not receive proposals to extend the OPEC+ deal in its existing form until the end of the first half of 2019.

As for the future deal, Novak noted that the Energy Ministry is in favor of coordinating the level of oil production after the OPEC+ deal ends, "so the market would not be flooded with oil."

The OPEC+ countries might extend cooperation on balancing the oil market in one form or another for an unlimited period of time. "If we talk about the format, we can make an indefinite agreement. For example, we have the Forum of Gas Exporting Countries, which was organized in 2009. There it is not written that for 10 years the countries would gather and discuss the situation in the gas markets. This can generally go on for an unlimited period of time," he said.

The Minister said that the Russian Ministry of Energy does not rule out creating a separate organization after the OPEC+ deal end, but no specific decisions have been made yet.

"One of the options discussed is formalization. An organization that could be formalized. But once again, no decisions have been made, and we did not discuss this in detail," he added.

Oil refining 

Russian refineries in 2018 will increase oil refining from 279.9 mln tonnes to 280-281 mln tonnes, he said.

"Primary processing can be higher than in 2017. Last year the figure was 279.9 mln tonnes, this year it will be 280-281 mln tonnes," he said.

Novak also noted that the ministry maintains a forecast for oil production and export for 2018.

"As for oil production, we are expecting that in 2018 it will be at the level of last year, that is somewhere around 547 mln tonnes. The deliveries of products for export will be at the level of last year," he added.