RUSSIA - OPEC DIMENSION
PLATTS - Russia is committed to its OPEC pact with Saudi Arabia and will continue supplying Europe energy despite tensions with the West after US-led strikes on Bashar al-Assad's Syrian regime, said Vladimir Putin's spokesman.
Oil prices hit multiyear highs ahead of missile strikes by the US, UK and France against chemicals weapons sites in Syria. Analysts feared a direct confrontation between the West and Moscow could spill over into energy markets. Russia is the largest supplier of gas and crude to Europe.
An escalation of regional conflicts, it's feared, could also strain the Kremlin's pact with OPEC and key members such as Saudi Arabia, which are historically allied to the US and dependent on Washington for security guarantees.
However, a senior spokesman of Russian President Vladimir Putin has dismissed concerns that geopolitical tensions could influence Moscow's energy policies. Relations with OPEC and Saudi Arabia are on "a different dimension" and have nothing to do with geopolitics, Dmitry Peskov said Tuesday.
Under the production cut deal, which came into force in January 2017, OPEC and a Russia-led group of 10 major producers agreed to cut 1.8 million b/d of crude from the market. Their pact is effective through to the end of 2018, with a further permanent framework for market management currently under discussion.
"We are developing good relations in respect of energy markets, coordination with Saudi Arabia, other countries. We've maintained contacts over those issues and these contacts will continue," Peskov told Platts by telephone.
Russia is a key ally of the Assad government in Syria, which is accused by the US and some European powers of using chemical weapons against its own people.
The Joint Ministerial Monitoring Committee, co-chaired by Saudi Arabia and Russia, is to meet this Friday in Jeddah, Saudi Arabia, to discuss progress in rebalancing world oil markets and draining stockpiles. The ministers will also consider the future of their current deal, with some participants urging an extension into 2019.
EUROPE ENERGY FLOWS
Peskov also played down concerns over the security of Russian energy supplies flowing into Europe. Around 40% of Russia crude exports head to Europe, while the country accounts for about a third of inland gas demand in the region.
"In the hardest times of confrontation, Russia has proved it is an absolute guarantor of energy security in Europe and the most reliable energy supplier to its customers," he said
Fears over Russia dominant position as a European energy supplier come also as the country's relations with the UK deteriorate following the attempted poisoning with nerve agent of a former Soviet-era spy in the British city of Salisbury. The UK government has claimed that Russia likely carried out the attempted assassination.
Pestov insisted that Russia remains a reliable supplier of energy to the region despite the threat of tougher economic sanctions from the US.
"Russia has never suspended its deliveries and proved repeatedly its reliability," he said.
However, Russia and Ukraine both accused each other of briefly of turning off the gas taps during a bitter commercial dispute over prices between 2006 and 2009.
"Contrary to some statements, no one can bring a single case when Russia used energy supplies as a kind of political, diplomatic weapon," Petrov said.
Energy analysts surveyed by Platts also agree Russia is unlikely to limit its energy flows to Europe because of the Syrian conflict and worsening relations with regional powers. Russia's budget is heavily dependent on energy exports.
Russia has delivered pipeline gas to Europe since the late 1960s and many European refineries rely on the Russian Urals crude blend.
However, some sanctions have targeted certain areas of Russia's energy industry.
Russia's state-owned Gazprom CEO Alexei Miller and Surgutneftegaz general director Vladimir Bogdanov are among several high-profile Russian businessmen and officials who were targeted by restrictions earlier this month.
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