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Russia says its oil firms ready to back curbs with OPEC

Russian Energy Minister Alexander Novak speaks during the 23rd World Energy Congress on October 11, 2016 in Istanbul © AFP / Ozan Kose

Istanbul, Turkey, Oct 12 – Russia on Tuesday said its oil majors were ready to back moves by the government to curb oil production in coordination with OPEC to push up pressured oil prices.

A day after President Vladimir Putin propelled oil prices higher by saying Moscow could join OPEC by freezing or cutting production, Energy Minister Alexander Novak confirmed that Russia was ready to take part in the process of “rebalancing” prices.

But speaking at the World Energy Congress in Istanbul, Novak emphasised that Russian companies, who include state-controlled oil giant Rosneft, were prepared to be included in such moves.

“We have discussed this situation with our companies… And I repeat again that our companies have expressed readiness to take part in joint actions on the oil market.”

“We will continue this work with our companies,” he said, noting that while Russia has some 200 oil companies, 10 prominent players account for 90 percent of production.

Putin’s declarations on Monday, also at the Istanbul forum, gave oil markets a boost with the prospect of tighter coordination between the top non-OPEC oil producer Russia and the cartel.

Novak is expected on Wednesday to hold talks in Istanbul with some OPEC members. OPEC had last month in Algiers agreed its first production cut in eight years to bolster prices.

“I think that very soon we can join decisions taken by OPEC,” said Novak, echoing Putin’s comments. “It is important for the producers and consumers.”

He said that OPEC and non-OPEC members could take actions to stabilise the situation on the oil markets “without touching the fundamental market principles”.

“It is a shared task,” he said, praising participants for showing “sense and flexibility”.

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The secretary general of OPEC Mohammed Barkindo, described the Algiers agreement as a “turning point” and hailed the greater coordination with non-cartel members like Russia.

“We have restored the broad consensus among all producers,” he said.

Following the mismatch of supply and demand that drove up prices, he said there was an “overhang” of high stock inventories “rising to levels we have never seen before.”

“In order to restore stability we need to — with our non-OPEC friends – to address the issue of this overhang.”

“Until we address this, we will not achieve the fair (oil) price.”

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