OPEC and Russia outline vision for permanent oil alliance

By Olga Tanas on 5/31/2017

MOSCOW (Bloomberg) -- OPEC and Russia added more detail to their vision for a permanent alliance between oil producers currently working to clear a global surplus.

When the 24-nation coalition agreed last week to persevere with output cuts until March, officials from the Organization of Petroleum Exporting Countries and Russia spoke of continuing to co-operate beyond that point. OPEC Secretary-General Mohammad Barkindo and Russian Energy Minister Alexander Novak said in Moscow on Wednesday they’re considering how to formalize the partnership.

“‘The cooperation and collaboration between us -- OPEC and non-OPEC -- will outlive the implementation process,” Barkindo told reporters. “We are putting in place, if you like, the building blocks for a Catholic marriage. We do not expect a divorce in this marriage.”

OPEC and Russia overcame years of mutual distrust in December when they assembled the alliance to cut oil supply and try to end a three-year price slump that has battered their economies. When they agreed to extend the accord on May 25, Novak and Saudi Arabian Energy Minister Khalid Al-Falih said they’re prepared for further action if necessary.

OPEC and non-OPEC ministers may continue to meet once or twice a year after the current agreement ends, Novak said. “When the action ends and the market is balanced, we will undoubtedly continue working and interacting with OPEC,” he said.

A six-nation committee overseeing implementation of the deal will consider proposals for how to sustain the partnership in the long term when it meets next month in Moscow, Novak said. These will then be presented to ministers when they next gather in November in Vienna.

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