Russia wants to exclude gas condensate from OPEC deal

The Kremlin is going to continue cooperation with OPEC to keep the oil market balanced, although it is now likely to deepen output cuts. Moreover, Moscow is planning to discuss with the cartel the exclusion of gas condensate from its cap under the current agreement.

Gas condensate production keeps Russia from fully complying with its share of the cuts under the OPEC+ deal, says citing Minister of Energy of Russia Alexander Novak. While the country aims to comply with its obligations in November, it also believes that some nuances in production, such as condensate output, should be taken into account, the minister stated on Wednesday. Condensate is included in Russia’s oil production statistics, although it mainly stays in Russia and therefore does not affect global supply, said Novak, adding that Moscow needs to discuss with the cartel the exclusion of gas condensate from its cap under the current agreement.

Russia heads the non-OPEC group of producers who are limiting their output as part of the OPEC+ deal. Although the country has committed to keeping its production under 11,191 million bpd, which is down by 230,000 bpd from the October 2018 level, it has been slow to comply with its obligations. In recent months, Russia’s output has been slightly above its quota. The next OPEC meeting is scheduled for 5 December in Vienna, expected to be followed by negotiations with non-OPEC exporters including Russia. Speaking at the annual Russia Calling! Investment Forum in Moscow last week, President Vladimir Putin said that Russia and OPEC have “a common goal” to keep the oil market balanced, and that Russia would continue to cooperate with the cartel to keep the market stable.

Novak declined to unveil Russia’s position before the December meeting but promised to discuss the situation with Russian oil companies in advance. Russia is unlikely to agree to deepen cuts in oil output at a meeting with fellow exporters next month, but could commit to extending existing curbs to support Saudi Arabia, claims Reuters citing anonymous sources.

Russia includes gas condensate, a side product also known as a ‘light oil’ produced when companies extract natural gas, in its monthly oil production statistics, while many other oil-producing countries do not. At the moment, gas condensate accounts for around 6% of Russian oil production. In winter, the country traditionally produces more gas condensate due to the launch of new gas fields, according to Novak. “We believe that gas condensate should not be taken into account (of overall oil production statistics), as this is an absolutely different area related to gas production and gas supplies,” the minister emphasised.

By Anna Litvina