Leading oil producers plan to meet in Doha on April 17 to cement
a preliminary deal reached between Russia, Venezuela, Qatar and
Saudi Arabia in February to freeze oil output at levels reached
in January, to curb a surplus on the oil market.
"Now there is discussion of how long production will be frozen
and ways to monitor the agreement," one of the sources said.
"The level of $45-50 (per barrel) is acceptable from the point
of view of market balance: if prices go higher shale oil
production could start to recover."
A Russian Energy Ministry spokeswoman confirmed that the
information provided by the sources was correct.
Oil producers such as Russia and Venezuela are highly dependent
on energy revenues, with their state budgets at risk after
global oil prices fell to under $40 per barrel from over $115 in
June 2014.
The Doha meeting is expected to bring together major oil
producers, including the ex-Soviet nations Kazakhstan and
Azerbaijan, which along with Russia have seen their currencies
falling sharply on weak oil.
The key question concerns Iran, which saw its oil output
curtailed for years by sanctions that have been lifted this
year, and wants to bring its output to pre-sanctions levels
before sticking to any agreement. Tehran plans to attend the
Doha meeting, Russian Energy Minister Alexander Novak said this
week.
The sources who discussed Moscow's position said they believed
Iran would struggle to quickly reach levels it has announced.
They said Iranian growth is now coming mostly from selling oil
from storage and putting easy-to-launch fields on stream.
"A freeze without Iran is being discussed. At the moment we
don't see tough conditions (from others) for Iran to join," one
of the sources said.
The sources added that 17 countries in total could take part in
the Doha meeting. They said Russia was considering a number of
options to deepen its cooperation with OPEC, but they don't
include joining the organization.
PRODUCTION, NOT EXPORTS
The Russian sources said that the deal to freeze oil output is
expected to speed up rebalancing of oil supply and demand by
around half a year.
Russia was pumping at a 30-year high last month of 10.91 million
barrels per day (bpd), even higher than its previous record in
January. <O/RUS1> The sources said the agreement in Doha is set
to cover production, not exports.
They said Russia would not put new projects on hold as part of
the freeze deal, and may use other methods to regulate its
production, including technical ones. They did not elaborate.
Last month, industry sources told Reuters that Rosneft <ROSN.MM>,
the world's top listed oil company by output, was floating the
idea of a domestic production cut to balance the global market
and as the firm faces a natural decline this year.
"A cut in production was not discussed as it is hard to
implement and may lead to a sharp jump in prices, causing a new
wave of output activation at more costly fields," one of the
sources said.
(Reporting by Vladimir Soldatkin; writing by Katya Golubkova;
editing by Jason Bush and Peter Graff)
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