Russia breached its oil-output quota agreed with OPEC for a third straight month as the oil producers’ alliance prepares for crucial talks this month on increasing supplies. Oil output averaged 10.97 million barrels a day last month, almost unchanged from a month earlier, data emailed on Saturday by the Russian Ministry of Energy’s CDU-TEK statistics unit showed.
That means that its compliance with the production quota of 10.95 million was close to 95 percent, as it was in April. In March, the rate was 93 percent. Russia and Saudi Arabia last month signaled that they might start increasing supplies in the second half of this year in response to a surge in prices. The move is yet to be approved by other members of the OPEC and its allies, and some, such as Ecuador, have said that they are not in favor.
The 24-member group is scheduled to meet in Vienna later this month to discuss the future of their landmark 2016 accord. Several Russian companies want the production cap eased, as the grand alliance has already achieved a key goal of draining a surplus in global stockpiles.
The deal with OPEC has been a success and “we believe that the global energy market is currently balanced,” Russian President Vladimir Putin said on May 25. “Our arrangements were never intended to remain in force forever.” Russia has about 500,000 barrels a day of spare production capacity, according to Gazprom Neft PJSC, the country’s third-largest producer.
The company and Rosneft PJSC are to lead the ramp-up if output restrictions are eased, Citigroup Inc and ESAI Energy LLC said. Rosneft this week started testing its capacity to increase output.
OPEC’s de facto leader, Saudi Arabia, is also lifting supply. Production rose to the highest in seven months last month, tanker-tracker Petro-Logistics SA said. Meanwhile, Russia and Abu Dhabi on Friday signed a cooperation agreement to stabilize energy markets amid a rising trend in oil prices, the Kremlin said. The deal, signed by Putin and Abu Dhabi Crown Prince Mohammed bin Zayed al-Nahyan, calls for both countries to maintain contacts “to ensure balance and stability on the global hydrocarbon market, taking into account the interests of producers and consumers.”
Abu Dhabi, one of seven states in the United Arab Emirates, holds more than 90 percent of the federation’s 98 billion barrels of proven crude oil reserves. The emirates are OPEC’s fourth-largest crude oil producer. Bloomberg
