MOSCOW (Reuters) - Russian Energy Minister Alexander Novak said there is a consensus on how to handle an exit from the global oil output cuts deal, but detailed exit talks should only begin when markets approach a balance, he told Reuters.
The Organization of the Petroleum Exporting Countries and other large oil producers led by Russia agreed last month to extend their deal to cut a combined 1.8 million barrels per day of oil production to the end of 2018 in order to remove excessive inventories and support oil prices.
Novak also said there was an option to extend the deal beyond its expiration date of the end of 2018, while he sees markets balancing in third quarter 2018 or the end of next year.
“Our task, above all, is the balance of the market and sustainable demand and supply balance. We are aiming at reaching this result, this could be achieved, if the things are going well ... during 2018,” Novak said in an interview.
Russia, which this year cut production significantly along with OPEC, has been pushing to ensure that when the cutbacks end this will not flip the market into a supply deficit or cause a sharp rise in prices that would spur U.S. shale producers to increase output.
Saudi Arabia’s Energy Minister Khalid al-Falih said on Wednesday it was premature to discuss any changes to the OPEC-led supply cut pact as market rebalancing is unlikely to happen until the second half of 2018.
Novak said it would take some time for the deal to be wrapped up.
“The detailed parameters will be discussed by the time we approach the balance. There could be different time frames, depending on forecasts of supply and demand increase on the global markets,” he said.
“We have a common understanding on this issue but I don’t want to discuss hypothetical scenarios now,” Novak said, adding there was an option to extend the deal beyond 2018.
“There is a consensus among the (oil) ministers that we should avoid oversupply on the market when exiting the deal.”
OPEC and Russia together produce over 40 percent of global oil. Moscow’s first real cooperation with OPEC, put together with the help of President Vladimir Putin, has been crucial in roughly halving an excess of global oil stocks since January.
With oil prices rising above $60, Russia has expressed concerns that an extension for the whole of 2018 could prompt a spike in crude production in the United States, which is not participating in the deal.
He also said that Saudi Arabia’s plans to list up to 5 percent of its energy company Saudi Aramco is not linked to the global oil cut deal.
“Everyone is interested in the market to achieve the balance,” Novak said in response to a question on possible Saudi Arabia’s exit from the deal after the Saudi Aramco sale.
“We have good relations unfolding between Saudi Aramco, energy ministry of Saudi Arabia and our companies,” Novak said.
Reporting by Olesya Astakhova; writing by Vladimir Soldatkin; editing by Katya Golubkova and Jane Merriman