Russia to raise condensate issue in Vienna

Russia will raise the issue of excluding condensate from the Opec+ production cut agreement when the group of producer countries meets in Vienna this week, energy minister Alexander Novak said today.

The deal, which runs until the end of March, places limits on crude production from participating Opec countries and on crude and condensate output from the non-Opec participants. Opec adopted a common definition of condensate in the late 1980s to ward off a move by some members to pass off part of their output as the lighter liquid.

"We will be discussing with our colleagues [the issue of] taking into account [production] data without gas condensate," Novak said. The move was discussed at a meeting last week between Novak and several of Russia's largest oil companies.

Russia produced 556mn t of crude and condensate last year. Taking Novak's earlier estimate that 7-8pc of that was condensate, and using a conversion rate of 8.3 bl/t used by state-controlled Rosneft, this means Russia produced 885,000–1mn b/d of condensate in 2018. Novak last month noted that this output does not affect global balances. Only 1.75mn t of Russian condensate was exported in 2018 — although some gets blended with crude in the pipeline system — and most is supplied domestically by rail.

Opec and its 10 non-Opec partners — known collectively as Opec+ — meet this week to formulate a policy for next year. The deal to curb collective output by a combined 1.2mn b/d expires on 31 March. Part of the strategy may involve encouraging recalcitrant members to adhere more rigidly to their quotas. Russia agreed to limit its output to 11.14mn b/d, but has mostly not achieved 100pc compliance. Russian president Vladimir Putin has voiced his continued support for the co-operation.

By Oksana Yablokova