Russia backs plans to oil production

Russia backs plans to oil production

Russia backs plans to oil production

AFP photo

Cutting oil production is the best way to stabilize the market, Russian Energy Minister Alexander Novak has said in Istanbul at the World Energy Congress. 
Speaking at the congress on Oct. 12, Novak said the oil price issue was different than previous crises and was lasting longer than previously.

“We should participate in all discussions to have sustainable energy production and to avoid a crisis,” the minister added. 

He explained that although production was relatively high, investor confidence was down because of low oil prices. “In the last two years, investments were reduced to $450 billion,” Novak said.

Novak underlined the need for new investments, noting that if this fails to occur, the quality of energy resources and their diversity would be reduced. He offered to work with OPEC to stabilize market conditions. 

“We will not change the market process, we will just try to ameliorate market conditions. Today, not only producers but also consumers should think about these conditions,” he said. 

Russian Energy Company Lukoil’s vice president, Leonid Fedun, also said measures should be taken to prevent the impacts of low oil prices on investments.

“An $80 per barrel oil price would be the market’s golden mean and the oil market needs a price that will ensure and attract investments,” he said.

Nonetheless, he added that they did not expect an increase in oil prices in the short term.
Oil’s central role in the global economy should not be left to chance against the attacks of speculators, Venezuelan Oil Minister Eulogio del Pino said at the same event. 

He highlighted that OPEC was in a position in which a lot of communication and cooperation was needed to obtain a consensus on oil stabilization, which they tried to obtain at the beginning of the year.

“We sat together in Doha to make a proposal. That was the first time that everyone heard about the freeze. It was very well-received especially from Saudi Arabia. In April, we held a very historical meeting with 18 countries. Unfortunately, we were not able to get an agreement. So we thought we could get together in Algiers and come up with an agreement. We were able to get a consensus about a framework to discuss with non-OPEC members,” del Pino said.

“Now we are at the right time to talk with Mr. Alexander Novak and other energy ministers here for this meeting,” he said, highlighting that the agreement was needed for the benefit of the global economy.

OPEC said Oct. 12 that it was inviting Russia and other key non-members to a meeting later this month as the oil cartel and Moscow seek to tighten cooperation to boost historically low crude prices.

The announcement came after an Istanbul meeting between several top OPEC energy ministers and Novak aimed at advancing joint efforts to bolster oil prices that have hurt the economies of crude producers.

“We agreed to have a technical meeting of OPEC... on 28-29 of this month [October]. An invitation is going to be sent to some key non-OPEC countries,” Qatari Energy Minister Mohammed Saleh al-Sada said after the talks.

“This meeting is meant to give a better understanding of the best way of how to move toward the rebalancing of the market to the interest of all – not only producers and exporters but also the world economy,” added the Qatari minister.

OPEC is focusing on the post-Algiers meeting period and does not plan to target any specific oil price, according to Mohammad Barkindo, OPEC’s secretary-general.

Barkindo said that two years ago when oil prices crashed, he was unsure what direction OPEC was heading.

“We saw production and supply ramping up in the last two years and this cycle became the most severe. Together with my colleagues within and outside OPEC, we began consultations. It was obvious that there was a need for change in direction in order to return the market to some form of stability with a sustainable basis,” Barkindo said.