VIENNA (Reuters) - Energy ministers from Russia and Qatar along with OPEC’s secretary general discussed possible joint action to stabilise the oil market, Russian Energy Minister Alexander Novak said ahead of OPEC’s meeting next month aiming to cement a deal agreed in Algiers.
Russia is the world’s largest oil producer but not a member of the Organization of the Petroleum Exporting Countries and its budget has been hit by low oil prices, the same as for many OPEC nations.
Novak, in Vienna after visiting Saudi Arabia over the weekend for talks with Saudi Energy Minister Khalid al-Falih, said sharp falls in the price of crude threatened to trigger an oil deficit and unpredictable volatility in prices.
“That’s why ... (an oil output) freeze or even a cut for a certain period of time is a right decision for global energy ... Being a short-term measure, an oil output cap may help to lower volatility in the market and make it more stable,” Novak said.
Last month in Algiers, OPEC agreed modest output cuts that are due to be set in stone in the coming weeks. The goal is to trim production to a range of 32.50-33.0 million barrels per day (bpd).
“We have in detail discussed ... current situation (on oil market) and different mechanisms and options of joint actions,” Novak told a briefing after talks with his Qatari counterpart Mohammed al-Sada and OPEC Secretary General Mohammed Barkindo.
Russia is ramping up its oil output amid weak oil prices, as weak rouble and investments made in previous years are helping its oil sector. In September, Russian oil output hit another post-Soviet high of 11.1 million barrels per day (bpd).
On Monday, Novak repeated that an oil output freeze is “an effective tool Russia is ready for (in a move) to balance the market”. Yet he said that Moscow was considering “different options,” but declined to provide details.
Russia plans to bring another oilfield on stream this month, Lukoil’s Pyakyakhinskoye in the Yamal Arctic region, in addition to Messoyakha launched by Gazprom Neft (SIBN.MM) and Rosneft (ROSN.MM) last month.
Rosneft, the world’s top listed oil producer by output, plans to launch its Suzun field in Siberia this year as well, with Lukoil planning to put its Caspian Filanovsky field in operation by the end of 2016, adding more to the global glut.
On Monday, Novak declined to say at which levels Russia would be ready to cap its output, adding that lower-tier officials from OPEC and non-OPEC countries, including Russia, will be working on terms of a possible deal on Oct. 28-29 in Vienna.
OPEC’s Barkindo said in opening remarks to Monday’s meeting that Russia and OPEC were “committed to stable and predictable markets”.
“While there are signs that the rebalancing of the fundamentals is under way with overall non-OPEC supply contracting this year and demand ... at healthy levels, the large stock overhang continues to be a major concern,” Barkindo said.
Additional reporting by Francois Murphy; Editing by Susan Fenton and David Evans