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Energy

Novak in charge of Moscow's OPEC ties despite promotion: sources

MOSCOW (Reuters) - Alexander Novak is set to remain Moscow’s main representative at OPEC and provide stability during oil market volatility, even though he has been promoted to deputy prime minister from energy minister, three industry sources said on Monday.

FILE PHOTO: Russian Energy Minister Alexander Novak wearing a protective face mask is seen before the Victory Day Parade in Red Square in Moscow, Russia June 24, 2020. REUTERS/Maxim Shemetov

Prime Minister Mikhail Mishustin on Monday proposed the CEO of hydro-power company Rushydro HYDR.MM Nikolai Shulginov, 69, should become Russia's energy minister following Novak's promotion.

Novak, 49, has been energy minister since 2012. He has led Russia’s negotiations with the Organization of the Petroleum Exporting Countries (OPEC) and played an important role in a deal to cut global oil output, first signed in 2016.

Since then, the COVID-19 pandemic has led to a deep fall in fuel demand and greatly reduced oil prices, leading to further decisions to reduce output by OPEC and allied countries, such as Russia, in a grouping named OPEC+.

In his first public remarks following his appointment, Novak said he would oversee Russian energy strategy “in tandem” with Shulginov.

OPEC+ talks on future output are at a crucial stage ahead of a formal OPEC meeting on Nov. 30 and Dec. 1.

“Novak will remain in charge of OPEC ties, while Shulginov is likely to oversee the power sector,” one industry source said on condition of anonymity.

Novak has had to navigate the different interests of Russian oil producers, such as Rosneft ROSN.MM, headed by powerful Putin ally Igor Sechin, and Lukoil LKOH.MM, led by veteran oil man Vagit Alekperov.

“Shulginov doesn’t have an administrative tool (political influence and connections) to strike a balance between Sechin and Alekperov,” the source said.

“It looks like Novak will help him in the beginning in dealing with OPEC,” said a second source close to Novak, who has developed a personal rapport with many OPEC leaders.

A third industry source said Novak’s promotion meant he would be more respected by OPEC officials.

The Russian energy ministry did not reply to a request for comment.

Shulginov has worked in the electric power industry since 1975, a biography on Rushydro’s website says. He was made Rushydro’s CEO in 2015.

Reporting by Vladimir Soldatkin, Olesya Astakhova and Oksana Kobzeva; Editing by Andrew Osborn and Barbara Lewis

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