Russians, Saudis have capacity to ramp up oil output: Russian energy minister

Wed Apr 20, 2016 7:52am EDT
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MOSCOW (Reuters) - Saudi Arabia and Russia both have the capacity to steeply increase oil production, Russian Energy Minister Alexander Novak said on Wednesday, and he said he was not confident exporters would be able to agree on freezing their output by June.

A deal to freeze oil output by OPEC and non-OPEC producers fell apart in the Qatari capital of Doha on Sunday after Saudi Arabia demanded that Iran join in the freeze.

The failure of the Doha talks raised the prospect of a pump war between Russia and Saudi Arabia, with each country ramping up production to try to take market share from the other.

"They (Saudis) have the ability to raise output significantly. But so do we," Novak told journalists on the sidelines of an international energy conference in Moscow.

He said that Russia's oil production could exceed 540 million tonnes this year (10.8 million barrels per day).

OPEC is to hold its next scheduled meeting in the Austrian capital, Vienna, on June 2.

"We are not sure that they will be able to agree (on an output freeze) within OPEC," Novak told journalists. "This is a hard task which the countries undertook - to agree by June," he said.

Novak said that half an hour before the Doha meeting, Russia was still confident that a draft decision on an oil output freeze agreed in February would be passed.

The sudden change of mind by the Saudi delegation in Doha came as a "surprise", he said, but stressed that this would not have an impact on Russia's relations with Saudi Arabia.   Continued...

Russian Energy Minister Alexander Novak attends the National Oil and Gas Forum in Moscow, Russia, April 20, 2016. REUTERS/Sergei Karpukhin