As Russian energy minister Alexander Novak flies to Algeria this week for talks with OPEC on output cuts, developments at home indicate non-OPEC Russia is not preparing for any coordinated production action.
Five leading Russian oil companies, responsible for three quarters of output in the world’s largest producer, all say they will be boosting output next year after reaching record levels in recent months.
No doubt, all these companies would obey if President Vladimir Putin ordered them to curtail production.
But so far Putin has had no meeting with leading Russian oil producers – state-owned or private – and even the energy ministry has yet to hold such consultations to sort out details and logistics of any output action.
“We think that it is impossible to agree… No one trusts anyone, everyone has been just ramping up production (within OPEC and outside),” a source at Russia’s leading oil producer, Rosneft, said.
Kremlin-controlled Rosneft (ROSN.MM), which accounts for over a third of Russian production, has been the biggest opponent of the global oil freeze deal since it was first discussed at the beginning of the year.
Rosneft’s influential chief, Igor Sechin, a close ally of Putin, has said internal differences were killing OPEC and its ability to influence the market.
The Rosneft source said the firm’s position has not changed despite the latest developments, which even saw Putin meeting Saudi Deputy Crown Prince Mohammad bin Salman in China in early September and the country’s ministries agreeing to work together to help stabilize oil markets.
Days after the pact was signed Russia reported a new post-Soviet production record of over 11 million barrels per day.