Russia warns Opec+ against hasty decisions on output

Opec+ "should not be hasty" when it meets later this week to discuss production policy, Russian deputy prime minister Alexander Novak said today.

The coalition has been following a roadmap to gradually restore the output it removed from the market last year in monthly 400,000 b/d increments, and ministers from the producer group are due to meet virtually on 2 December to set crude production quotas for January. But a pending release of strategic reserves by some of the world's major consuming countries combined with the emergence of Omicron, a new and potentially highly infectious variant of Covid-19, mean this month's meeting will be far from straightforward.

"We need to look at how the situation develops, we need to monitor the market closely. There should be no hasty decisions," Novak said.

To give itself more time, the group has tweaked the schedule for this week's meetings. The original plan was for the Joint Technical Committee (JTC) to meet today, followed by the Joint Ministerial Monitoring Committee tomorrow, Opec ministers on 1 December and ministers from the wider Opec+ group on 2 December. The new format is for the JTC to meet on 1 December, the same day as Opec ministers, and for the JMMC to meet on 2 December followed by the full Opec+ gathering the same day.

"We will have an additional discussion with Opec+ countries on the market situation and the need of [any] measures. As we want to work on it in detail, the JMMC meeting was moved [to a later date], so that we get more information about current events, including the new variant of the virus," Novak said.

If the group decides to stick with its 400,000 b/d monthly hike in January, another 100,000 b/d will be added to Russia's crude quota. Moscow is edging closer to its pre-pandemic production level but Novak insists that it will have no difficulty reaching a higher ceiling.

"I do not see any problems, and all our companies confirm that they are ready to get back to those levels which they had before the cuts," Novak said, according to state-run news agency Tass.

Russia's largest private-sector oil producer Lukoil said last week that it has restored its crude output by 90pc and will soon have used up all its spare capacity. Production growth beyond that will depend on the productivity of new wells that have been drilled this year, it said.

Meanwhile, state-controlled Rosneft and Gazpromneft are also close to the limit of what they can add. Rosneft brought all of its 182,500 b/d of spare capacity on line in the third quarter, it said earlier this month, while Gazpromneft now has almost no spare capacity and will have none by the end of 2021.

By Anastasia Krasinskaya