Russia to cut oil production gradually

Initial oil cut will be at least 50,000 barrels a day, Alexander Novak says

Russia to cut oil production gradually

Russia will cut its oil output gradually after its deal with OPEC, with plans in place to initially lower its production by at least 50,000 barrels per day (bpd), Energy Minister Alexander Novak said Tuesday. 

“There is already a schedule of oil output reduction split by month. It envisages a gradual cut of oil output in accordance with the agreement," Novak was quoted as saying in a report by Russia's Prime Business News Agency. 

"We expect to reduce production by some 50,000 - 60,000 bpd in January at least," he added.

Novak said he also plans to meet with executives of Russian oil companies in order to distribute production quota cuts up to the end of 2018, according to the report. 

The initial level is way less than the country stated as part of the deal between OPEC and non-OPEC oil producing countries that was reached in Vienna last week. 

Novak said last Friday that Russian crude oil production reached 11.4 million bpd in October. Moscow agreed to trim 2 percent from this level, equivalent to around 228,000 bpd. 

As part of the deal, while non-OPEC producers, including Russia, will trim their total supply by 400,000 bpd starting Jan. 1 for six months, OPEC members will make a total cut of 800,000 bpd, out of which 500,000 bpd will be carried by Saudi Arabia alone.

Moscow's plan to gradually lower its oil production could be due to seasonal constraints as it is harder for Russia to trim its output during the winter.

"For us it is much more difficult to cut than for other countries, stemming from our climatic conditions. That is a specific characteristic of our oil production sector," Novak was quoted as saying on Dec. 6 by Russian news agency Interfax.