EMEA News
Russia's Energy Minister says Nation Can Compete With OPEC
Aleksandr Novak, energy minister for Russia, told Rossiya-24 television that his nation is prepared to compete with the Organization of Petroleum Exporting Countries (OPEC) regardless of whether it continues to exceed its quotas.
Novak remarked that if an OPEC member exceeds the group's quota of 30 million barrels per day (bpd), "OPEC should redistribute its production among other members."
While he conceded that "It's very important whether OPEC will rebalance or if there will be extra output" and that "there is a lot of uncertainty," Novak said that "in general we are ready for it, and our oil companies are ready for this competition."
Novak's remarks come on the heels of criticism made last month by Igor Sechin, CEO of Russia's largest oil producer OAO Rosneft, who told delegates to the Eurasian Forum in Italy that Saudi Arabia's strategy to maintain its global oil market share and expand in a European market dominated by Russian crude "doesn't bring any significant victories; more likely the opposite."
"The question arises to what extent these supplies can be long-term and reliable," he added.
"The point being that Middle Eastern oil sent to Europe doesn't have any logistical advantage when compared with supplies to the Asia-Pacific Region."
But despite OPEC suffering the economic consequences of low oil prices, some analysts believe OPEC's business strategies are starting to pay off - at least with regards to North American competition.
Miswin Mahesh, an analyst at Barclays Plc in London, has told Bloomberg that with U.S. crude production falling by about 500,000 bpd from a peak of 9.1 million a day reached in June, OPEC is choking off that country's crude output.
He said: "Their strategy is still working for them; it means pain now, but in the medium-to-long term they will reap the fruits of a more balanced market, moderated shale supplies, growing demand for oil and ultimately a higher price."
In September, the International Energy Agency noted that with supplies outside OPEC forecasted to contract in 2016 for the first time since 2008, the group's strategy of refusing to cut production will make it the winner of the current price war.
