Russia warns Opec+ against hasty decisions on output

Market: Crude oil
29/11/21

Opec+ "should not be hasty" when it meets later this week to discuss production policy, Russian deputy prime minister Alexander Novak said today.

The coalition has been following a roadmap to gradually restore the output it removed from the market last year in monthly 400,000 b/d increments, and ministers from the producer group are due to meet virtually on 2 December to set crude production quotas for January. But a pending release of strategic reserves by some of the world's major consuming countries combined with the emergence of Omicron, a new and potentially highly infectious variant of Covid-19, mean this month's meeting will be far from straightforward.

"We need to look at how the situation develops, we need to monitor the market closely. There should be no hasty decisions," Novak said.

To give itself more time, the group has tweaked the schedule for this week's meetings. The original plan was for the Joint Technical Committee (JTC) to meet today, followed by the Joint Ministerial Monitoring Committee tomorrow, Opec ministers on 1 December and ministers from the wider Opec+ group on 2 December. The new format is for the JTC to meet on 1 December, the same day as Opec ministers, and for the JMMC to meet on 2 December followed by the full Opec+ gathering the same day.

"We will have an additional discussion with Opec+ countries on the market situation and the need of [any] measures. As we want to work on it in detail, the JMMC meeting was moved [to a later date], so that we get more information about current events, including the new variant of the virus," Novak said.

If the group decides to stick with its 400,000 b/d monthly hike in January, another 100,000 b/d will be added to Russia's crude quota. Moscow is edging closer to its pre-pandemic production level but Novak insists that it will have no difficulty reaching a higher ceiling.

"I do not see any problems, and all our companies confirm that they are ready to get back to those levels which they had before the cuts," Novak said, according to state-run news agency Tass.

Russia's largest private-sector oil producer Lukoil said last week that it has restored its crude output by 90pc and will soon have used up all its spare capacity. Production growth beyond that will depend on the productivity of new wells that have been drilled this year, it said.

Meanwhile, state-controlled Rosneft and Gazpromneft are also close to the limit of what they can add. Rosneft brought all of its 182,500 b/d of spare capacity on line in the third quarter, it said earlier this month, while Gazpromneft now has almost no spare capacity and will have none by the end of 2021.

By Anastasia Krasinskaya

Related news posts

Argus illuminates the markets by putting a lens on the areas that matter most to you. The market news and commentary we publish reveals vital insights that enable you to make stronger, well-informed decisions. Explore a selection of news stories related to this one.

News

05/03/25

Trump delays Canada, Mexico tariffs for carmakers

Washington, 5 March (Argus) — President Donald Trump's administration said today it would give a one-month reprieve for the top three US auto-makers from the stiff tariffs he imposed Tuesday on energy and other imports from Canada and Mexico. Trump told chief executives of GM, Ford and Chrysler that "we are going to give a one month exemption on any autos coming through" the US-Mexico-Canada (USMCA) free trade agreement, specifically for those car manufacturers, the White House said this afternoon. Nearly all trade between the three countries is covered by the USMCA, so a return to any terms of that agreement would mean lifting tariffs Trump imposed on Tuesday. The USMCA rules exempt cars manufactured in any of the three countries using parts made in or substantially transformed in any of the three countries, from US tariffs. The tightly-intertwined US and Canadian auto manufacturing industry could grind to a halt in as little as 10 days due to US tariffs, Ontario premier Doug Ford said on Tuesday. The 25pc tariff Trump imposed would be applied multiple times as raw materials and partially assembled vehicle components can cross the US-Canadian border between manufacturing plants as many as eight times before becoming a finished vehicle. The temporary exemption applied to a segment of the North American auto manufacturing industry is the first instance of a hasty policy retreat the Trump administration began to signal late Tuesday, the very day Canada and Mexico tariffs went into effect, roiling financial markets. Trump and the White House have alternatively downplayed the negative economic effects of tariffs, or suggested that the additional costs from import taxes would fall on foreign producers, not US consumers. "Tariffs are about making America rich again," Trump said in an address to Congress on Tuesday. "There will be a little disturbance, but we are OK with that." Trump also said that his policy agenda "will allow our auto industry to absolutely boom". But the tariffs Trump imposed have caused consternation and complaints across vast segments of the US economy, including the oil and gas sector he promised to champion. "We cannot stress enough the importance of the energy interconnection between our three nations, especially Canadian oil and electricity, to the American economy," oil industry group American Energy Alliance president Tom Pyle said today. "Imposing tariffs on these essential energy sources would unnecessarily disrupt the complex and integrated supply chain that has developed over 50 years." The White House said that Trump "is open to hearing about additional exemptions". Confusing signals The Trump administration accompanied the decision to temporarily exempt the US auto-makers with a barrage of mixed signals, insults lobbed at Canadian prime minister Justin Trudeau and accusations of insufficient cooperation on interdiction of drugs, which is the pretext for tariffs. The one-month reprieve should be sufficient for auto manufacturers "to get on it, start investing, start moving shift production here to the US," the White House said. It also said that the one-month reprieve period would coincide with the 2 April target date for Trump's "reciprocal tariffs" on all foreign auto imports, and that there would be no additional reprieves. "I also told Governor Justin Trudeau of Canada that he largely caused the problems we have with them because of his Weak Border Policies," Trump said this afternoon via his social media platform, following a conversation with Canada's leader. Trudeau in his remarks on Tuesday called Trump's tariffs "a very dumb thing to do" and vowed to keep the retaliatory Canadian tariffs in place until Trump completely reverses his tariffs on Canadian imports. By Haik Gugarats Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Find out more

News

UK govt consults on ‘clean energy future’ for North Sea

05/03/25

News

05/03/25

UK govt consults on ‘clean energy future’ for North Sea

London, 5 March (Argus) — The UK government has launched a consultation on the North Sea's "clean energy future", seeking to balance "continued demand for oil and gas" with the natural decline of the North Sea basin, the country's energy security and climate science. The government has proposed an end to new onshore oil and gas licences in England — as onshore licensing is a devolved matter — and once again confirmed its manifesto pledge for no new oil or gas licences for North Sea exploration. It also confirmed a previous commitment to end the so-called windfall tax on oil and gas producers in 2030. Further oil and gas licences "would not meaningfully increase UK production levels, nor would they change the UK's status as a net importer of oil and gas", the government said. It flagged the North Sea basin's maturity, which means that an absence of new licences makes only "a marginal overall difference to future North Sea production". The "vast majority of future production is expected to come from producing fields or fields already being developed on existing licences", the government said. It noted that while offshore licensing rounds have resulted in up to 100 permits each time, under 10pc of recently issued licences "have progressed to active production". But its halt on new exploration licences would not preclude any licence extensions being granted, the government said. It aims to provide "certainty to industry about the lifespan of oil and gas projects by committing to maintain existing fields for their lifetime". The decision does not affect the issuing of new gas or carbon storage licences, it added. Focus on 1.5°C The consultation also doubles down on the government's previous commitments to "clean power" by 2030 — which would entail a small role for gas-fired power generation, of under 5pc — and its determination to be a leader in climate action. "The science is clear that the world needs to take urgent action and that current plans for global production of oil and gas are not compatible with limiting global warming to 1.5°C," the government said. The Paris climate agreement seeks to limit global warming to "well below" 2°C above pre-industrial levels and preferably to 1.5°C. The government has requested views on its plans to ensure a "prosperous and sustainable transition for oil and gas" and to make the UK a "clean energy superpower", focused on technologies such as offshore wind, hydrogen and carbon capture, use and storage (CCUS). This will boost the UK's economy and energy security, the government said. "Clean energy" is key for energy security, as a reliance on fossil fuels leaves the UK at "the mercy of global energy markets", it added. "CCUS will be a critical component of the UK's energy transition," the government said. It also noted the geological advantage the UK holds for CO2 storage. There is "significant potential for CO2 import", likely from Europe, it said. The government has also sought extensive feedback on the transition for the country's oil and gas workforce. An "offshore renewables workforce" could stand at between 70,000 and 138,000 in 2030, it said, while oil and gas jobs are set to decrease, alongside the North Sea's fossil fuel production. Today's consultation will close on 30 April. And the government will publish its final guidance on an updated environmental framework for oil and gas "in good time", it said. By Georgia Gratton Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

News

US services activity accelerates in February: ISM

05/03/25

News

05/03/25

US services activity accelerates in February: ISM

Houston, 5 March (Argus) — Economic activity in the US services sector expanded faster than expected in February, as the biggest part of the economy helped offset factory weakness in the face of mounting trade tensions and policy uncertainty. The services purchasing managers index (PMI) rose to 53.5 in February, up from 52.8 in January, according to the Institute for Supply Management (ISM). It was the eighth consecutive month of expansion, above the 50 breakeven mark, and was higher than the 52.6 anticipated by economists surveyed by Trading Economics. "Slightly slower growth in the business activity index was more than offset by growth" in new orders, employment and supplier deliveries, ISM said. "Anxiety continues, however, over the potential impact of tariffs. Some respondents indicated that federal spending cuts are having negative impacts on their business forecasts." The ISM survey was released two days after ISM's manufacturing survey showed the segment barely expanding , for only a second month of growth after 26 months of contraction. Intensifying global trade tensions and massive federal job and spending cuts unleashed by the new US administration are generating volatility in financial and commodity markets and heightening concerns of mounting inflation and faltering economic growth. The business activity index was at 54.4, down by 0.1 point from the prior month, but the index's 57th consecutive month of expansion above the 50 breakeven level. The new orders index rose to 52.2 from 51.3. The employment index rose to 53.9, a fifth month of expansion, from 52.3 in January. The prices index registered 62.6, up from 60.4 and a third consecutive month above 60. By Bob Willis Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

News

Kazakhstan massively overshoots Opec+ target

05/03/25

News

05/03/25

Kazakhstan massively overshoots Opec+ target

London, 5 March (Argus) — Kazakhstan exceeded its Opec+ crude production target by almost 280,000 b/d in February, driven by a surge in output from its Tengiz oil field. Kazakhstan's crude production rose by 297,000 b/d to 1.747mn b/d in February, deputy energy minister Alibek Zhamauov said today, putting it 279,000 b/d above its Opec+ target of 1.468mn b/d. "We fully understand we are overproducing. The main reason is that we expected [new] Tengiz production in the middle of the year, however international shareholders decided to start up in January," Zhamauov said. The Chevron-led Tengiz oil project launched a third crude production plant in January. This helped boost Tengiz production to 878,000 b/d in February, compared with about 500,000 b/d in mid-January — although part of the increase is explained by the completion of maintenance at another crude unit at Tengiz . Zhamauov reiterated a previous pledge to cut production at other fields to offset the rise in Tengiz output. "It's not so easy to cut the production of all the oil fields, especially when we have international shareholders, so we are in a negotiation process with them," he said. The rest of Kazakhstan's crude production is from the 400,000 b/d Kashagan field and the 250,000 b/d Karachaganak field, as well as smaller fields operated by other firms including state-controlled Kazmunaigaz. Like Tengiz, Kashagan and Karachaganak are operated by international consortia. Kazakhstan remains one of the Opec+ alliance's largest overproducers, despite repeatedly pledging to compensate for exceeding its target since January 2024. This has frustrated other Opec+ members who have largely stuck to their production targets. "We will be putting in all our efforts to compensate during the year," Zhamauov said. Opec+ members, including Kazakhstan, agreed this week to proceed with a plan to start unwinding 2.2mn b/d of voluntary production cuts starting in April. Zhamauov confirmed that Kazakh crude flows through the Caspian Pipeline Consortium (CPC) have not been affected by a drone attack on a Russian part of the line in February. He added that repair work will take about two months but have no impact on Kazakh production. Kazakhstan's crude exports were 1.39mn b/d in February, up from 1.073mn b/d in January, while refinery runs were 348,000 b/d, up by 48,000 b/d, Zhamauov said. Condensate production was 278,000 b/d in February, compared with 271,000 b/d in January, he added. This brings Kazakhstan's total liquids production in February to 2.025mn b/d, in line with its target of increasing production by 10pc to 2mn b/d this year . By Aydin Calik Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

News

Indonesia plans to build new 500,000 b/d oil refinery

05/03/25

News

05/03/25

Indonesia plans to build new 500,000 b/d oil refinery

Singapore, 5 March (Argus) — Indonesia plans to build an oil refinery with a planned capacity of approximately 500,000 b/d, as part of the country's push to develop its downstream sectors to ensure energy security. The refinery will be able to process domestic and imported crude oil, and will produce up to about 532,000 b/d of various oil products, according to the ministry of energy and mineral resources (ESDM). The construction of the refinery will require investments of up to $12.5bn, and it will help to reduce Indonesia's dependence on imports, said the ESDM. No details on timeline or location were provided. It is unclear how the new refinery fits with Indonesia's existing downstream expansion plans, many of which have stalled. The country has not built a new refinery since 1994, leaving it reliant on imports to meet demand for oil products, notably gasoline. Several new projects have been touted in recent years, including a joint venture between state-owned Pertamina and Russian firm Rosneft for a 300,000 b/d refinery and petrochemical plant at Tuban in east Java, but have yet to reach a final investment decision. The country's president Prabowo Subianto has set a target for reviving Indonesia's oil output to 900,000-1mn b/d by 2028-29. "We still have a lot of oil," said energy minister Bahlil Lahadalia last month, encouraging the use of enhanced oil recovery and urging exploration wells to be upgraded to production wells. The country's oil production currently stands at around 600,000 b/d , with state-owned refiner Pertamina accounting for 400,000 b/d of this, while the country's consumption amounts to more than 1.5mn b/d. Developing DME Another downstream initiative that the ESDM is planning is the acceleration of the development of dimethyl ether (DME) through coal gasification, to use it as a substitute for LPG and reduce imports. The development of the DME industry will "no longer depend on foreign investors," said Bahlil, adding that it will instead rely on domestic resources and capital, "which will be implemented through government policies." Indonesia already has the raw materials as well as the offtakers, while the technology, money and capital expenditure can all come from the government and domestic private sector, said Bahlil, so Indonesia does not have to be "dependent on other parties." Indonesia has agreed to provide $40bn worth of funding to 21 first-phase downstream projects. By Prethika Nair Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Business intelligence reports

Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. These reports are specially created for decision makers who don’t have time to track markets day-by-day, minute-by-minute.

Learn more