For yet another month, Russia is producing above its quota under the production cut deal, potentially complicating next week’s OPEC+ meeting set to discuss how to proceed with the pact.
According to production data from Russia’s energy ministry seen and converted into barrels by Bloomberg, Russia pumped 11.244 million bpd between November 1 and 26, exceeding its quota by 54,000 bpd.
Russia, as leader of the non-OPEC group of producers of the OPEC+ deal, is taking the lion’s share of non-OPEC cuts and has committed to keeping its production at or below 11.191 million bpd, down by 230,000 bpd from the 11.421 million bpd reference production level from October 2018. But it has failed repeatedly to do that.
If Russia doesn’t sharply cut production for the rest of this month, November will be the eighth month this year that Moscow hasn’t fully complied with the deal. According to Bloomberg estimates, the only three months in which Russia did comply with the OPEC+ cuts were May, June, and July, when the crisis with the contaminated oil on the Druzhba pipeline cut Russian pipeline supplies to refineries in eastern Europe and Germany for months.
Russia has been slow to comply with its share of cuts, pumping slightly above its quota in recent months, and missing its production target in October yet again, despite promises that it would fall in line for October.
Russia’s non-compliance extending into November could further complicate talks next week. Russia is the key ally of OPEC and its de facto leader Saudi Arabia in the pact, but it has been regularly exceeding its cap. The Saudis, for their part, are going the extra mile by cutting 400,000 bpd more than they are expected to.
On the other hand, it has been thanks to Russia that the pact has held for three years now.
The Saudis are said to be pushing non-compliant OPEC members to fall in line and start keeping their respective quotas.
The Russians have a grievance about the pact that they are likely to take up with their OPEC allies. Russia could discuss with its OPEC partners the exclusion of gas condensate from its cap, as condensate isn’t exported, while it is included in Russia’s oil production statistics, Energy Minister Alexander Novak said last week.
By Tsvetana Paraskova for Oilprice.com