OPEC - RUSSIA UNLIMITED
PLATTS - Russia is willing to work with the OPEC coalition indefinitely to regulate global oil supplies and has advocated the creation of a new global body to monitor crude markets, the country's energy minister said Friday.
Alexander Novak's remarks come as OPEC and 10 non-OPEC countries are increasingly discussing a new format for their cooperation agreement, which expires at the end of 2018. The deal calls on the group to cut a combined 1.8 million b/d of crude production to help oil market rebalancing.
The pact shows "there is a tool, mechanism to influence the market balancing quickly if needed, in case of crises similar to the one started in 2014," Novak told reporters.
"If such cooperation is maintained [in the longer term] we'll send a signal that we can undertake [new] joint actions to improve the market at any moment," said Novak.
Details of a longer-lasting framework have not been agreed but it could include new measures to regulate crude production and information exchange, Novak said.
"Neither one nor the other is excluded," he said.
He added that a new international organization could be formed to discuss oil markets, bringing in other producers. The grouping could meet twice a year, he said.
"If we speak about that kind of the cooperation format, it could be a timeless agreement," said Novak.
The minister cited the Gas Exporting Countries Forum -- established in 2009 -- as an example.
Novak's comments came as Saudi Crown Prince Mohammed bin Salman, who has said he envisaged a 10-20 year alliance between Saudi-led OPEC and non-OPEC group led by Russia.
The coalition's joint ministerial monitoring committee is to discuss the future cooperation at the upcoming meeting in Jeddah, in Saudi Arabia, in late April and "possibly to prepare some documents" for the general meeting of OPEC and non-OPEC countries at the end of June, said Novak.
The JMMC consists of six countries, including Russia and Saudi Arabia.
In February, OPEC Secretary General Mohammad Barkindo told S&P Global Platts that a draft agreement was in the works to institutionalize the 24-member producer group's oil market cooperation. He did not rule out then that the document could be signed by the end of the year.
Novak said it was too early to speak about the details of this agreement.
The coalition partners have also been increasingly discussing potential changes to the current deal's targets, with the suggestion of using seven-year average stock levels, rather than the five-year average volumes used now, to evaluate the market balancing.
But Novak said no proposals on this measure have been submitted to the JMMC.
Novak was cautious as to the possibility of the coalition reconsidering production cut quotas in June, as many experts have estimated that the stock surplus has already been removed from the market. But he did not rule out such an option, envisaged by the current agreement.
"Our goal is to avoid market overheatingbut meet the goals set by the agreement," he said.
Novak dismissed concerns that Moscow's alleged poisoning of former spy Sergei Skripal in London and potential new sanctions could affect the cooperation with the OPEC coalition.
"We don't see any problems that could ruin the current agreement. To the contrary, we aim at developing the relationship," he said.
In terms of Russian bilateral relations Saudi, Novak also shrugged off the concerns.
"There is very good cooperation on the political level as well as ministerial and corporate levels. I don't see any premises for some issues to emerge that would put our collaboration out of order," he said.
However, Novak hasn't ruled out Moscow countering sanctions with measures aimed at western oil companies working in Russia.
"It's difficult to answer your question. We're interested in developing the energy cooperation with all countries to ensure a normal energy dialog. But, surely, if there are [new] measures against us, I think there are possibilities to react," he said, without elaborating on the issue.
US and EU sanctions, imposed on Russia in 2014, ban the transfer of Western technology for use in Russia's Arctic, deepwater or shale oil exploration and production. Russian companies also face restrictions on access to foreign financing.
The US is expected to decide on new sanctions against Russia over the Kremlin's alleged meddling in the US elections later in the day.
Earlier this year, Italy's Eni said the company had been forced to halt its operations within a joint project with Rosneft in the Black Sea due to the US sanctions.
ExxonMobil also said it is withdrawing from a number of exploration joint ventures in Russia set up with Rosneft in 2013 and 2014, following the further expansion and codification of US sanctions last year.
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