Non-OPEC delivers more than a quarter of promised cuts so far

By Angelina Rascouet and Elena Mazneva on 1/10/2017

LONDON (Bloomberg) -- Russia and Kazakhstan said they’ve met or exceeded their initial goals for trimming oil output, bringing cuts by non-OPEC nations in the first 10 days of this year to more than a quarter of the total pledged a month ago in Vienna.

Russia’s oil production has shrunk by around 130,000 bpd in the first week of January, from a post-Soviet record of 11.25 MMbpd in October, an official at the energy ministry’s CDU-TEK unit said Monday, asking not to be identified because of internal policy. The cuts from the world’s biggest energy producer go beyond its initial goal for a cut of at least 50,000 bpd this month.

“The Russian side is fulfilling all articles of the agreement and all the obligations it took,” Kremlin spokesman Dmitry Peskov told reporters on a conference call Tuesday.

Russia and 10 other non-OPEC nations joined forces with the Organization of Petroleum Exporting Countries on Dec. 10 to end a global glut that’s crashed oil prices and shaken energy-rich economies. The pact -- the first between the two sides in 15 years -- involves a reduction of 558,000 bpd from non-OPEC countries starting in January.

Kazakhstan’s energy ministry said it has met its Vienna commitment of curbing production by 20,000 bpd in January. That reduction came after October’s start-up of the country’s $50 billion Kashagan oil field, which is set to increase production from 140,000 bpd in the first half of this year to 180,000 bbl in the second half, Energy Minister Kanat Bozumbayev said last month.

The combined 150,000 bpd cut represents 27% of the promised reduction by non-OPEC countries.

“If the cuts get confirmed, this is definitely positive, as compliance improves,” Giovanni Staunovo, an analyst at UBS Group AG said by email. “We should soon see inventory draws materializing.”

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