Russia says oil output freeze not needed with price near $50

Elena Mazneva, Stephen Bierman 9/1/2016

MOSCOW (Bloomberg) -- Russia sees no need for talks with other major oil exporters on freezing output with prices at around $50/bbl, according to the Energy Ministry in Moscow.

If prices fall, then Russia will consider resuming discussions, the ministry’s press service cited Energy Minister Alexander Novak as saying.

The comments from Russia’s government come before OPEC nations and other oil producers meet for talks in Algiers later this month. Russia, the world’s biggest energy exporter, was a key negotiator in talks on an oil-output freeze with Saudi Arabia and other OPEC producers in April. That proposal failed after Iran declined to attend the meeting in Doha and Saudi Arabia refused to proceed with the deal without the participation of its Persian Gulf rival.

Iran, which plans to keep boosting crude output until it regains its pre-sanctions share of OPEC production, has said it will take part in the Algiers talks. A cap on production would be positive for the market, Saudi Arabia’s Energy Minister Khalid Al-Falih said in August, while ruling out a cut to output. Speculation that the meeting may result in action to stabilize the market helped oil post the biggest gain in four months in August.

Algiers Meeting

Novak plans to attend the International Energy Forum—73 countries accounting for about 90% of the global supply and demand for oil and natural gas—that starts a three-day meeting in the Algerian capital on Sept. 26. His ministry hasn’t commented on whether Novak will participate in the informal talks with Saudi Arabia and other OPEC nations.

While OPEC export revenues are seen falling to a 12-year low this year, crude suppliers want a deal to manage output, the organization’s Secretary General Mohammed Barkindo told Al-Hayat newspaper last week.

Right after the failed Doha deal, Russia said it may boost crude output to a new post-Soviet record of almost 11 MMbpd this year. Production may climb further to 11.65 MMbopd over the next three years, exceeding the record set almost 30 years ago, as low-cost fields allow producers to defy the slump in prices, Goldman Sachs Group Inc. analysts said in July.

The Russian government’s preliminary target for next year was set at 10.5 MMbopd to 11 MMbopd, depending on the market. The state is now weighing a new tax increase for its oil industry in 2017 with a decision possible in the fall as the nation’s economy struggles with its longest recession in two decades.

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