Russia Cuts Oil Output, Per Agreement with OPEC


Russian President Vladimir Putin (L) and Japanese Prime Minister Shinzo Abe after meeting in Tokyo, Japan, December 16, 2016 (REUTERS/Frank Robichon).

Russia cut its oil production in early January by around 100,000 barrels per day (bpd) from December, after a signed deal with Organization of the Petroleum Exporting Countries (OPEC). The production cut is a third of what Russia has pledged. In December, non-OPEC producers agreed to ax production by 600,000 with half of the contribution coming from Russia.

“Without question Russia is carrying out all the points of the agreement and all the obligations that it took upon itself,” Kremlin spokesman Dmitry Peskov told a conference call with reporters.

Russia’s oil and gas condensate output averaged 11.1 million barrels per day (bpd) in the period from Jan. 1 to Jan. 8, according to the two sources. This was down from 11.21 million bpd in December and October’s level of 11.247 million bpd.

As oil prices continue to rebound, Russia will bring in billions of dollars into the federal budget and billions in revenues for energy companies.

According to Russian President Vladimir Putin, U.S. and Japanese companies are interested in cooperating with Russia’s oil and gas sector to jointly work together. Now, this should benefit Russia’s economy and affect the global economy. To increase political ties with Japan, Putin visited Japan for two days in December 2016, and the summit gave rise to over 50 economic deals, 23 of which were energy agreements.

Now, with increasing development in oil and gas projects between Japan and Russia, there could potentially be billions of dollars flowing between the two countries. Although there would be increased activity in the traditional energy sector, this would also be beneficial to the clean energy industry.

In addition to increasing ties with Japan, Russia and Qatar have cooperated in energy deals. The Qatar Investment Authority (QIA) and Glencore closed its deal to purchase a 19.5% stake in Russian-owned Rosneft. The deal was worth over $10 billion and breathed life back into the Russian economy, which has been struggling with the low oil and gas prices and U.S. sanctions.

U.S. President elect Donald Trump will assume office on January 20, 2016, which could benefit Russia. Trump selected Exxon Mobil CEO Rex Tillerson to be the next U.S. Secretary of State, which could change the current political landscape between U.S. and Russia since he is known to have strong ties with Russia, and rose through the ranks by managing Exxon’s Russia account.

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