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Tokyo β€” Russia has lowered its oil output by 250,000 b/d from its October level and will reach its full commitment of a 300,000 b/d cut by the end of the month, Energy minister Alexander Novak said Friday.

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"We're fulfilling the obligation to gradually cut the output by Russia," Novak told reporters during a visit to Tokyo. "Today, we see a 250,000 b/d cut, and in line with the plans which we announced earlier, the level of 300,000 b/d will be reached by the end of April and we'll keep that level until the end of the agreement."

He added that no decision had yet been made on extending the OPEC/non-OPEC deal, under which OPEC agreed to cut 1.2 million b/d and 11 non-OPEC countries led by Russia committed to a 558,000 b/d cut from January through June.

Ministers from deal participants will meet in Vienna May 25 to review the agreement. Novak said Russia was "in daily contact" with OPEC countries.



"There are no decisions yet and each country is currently studying this issue independently," Novak said. "The possibility to extend the agreement was envisaged by the December agreement but the final decision is to be later."

The OPEC secretariat is currently studying the impact of the cuts and how an extension might affect the oil market in the second half of the year.

It will unveil its findings May 24 to a monitoring committee overseeing the deal composed of OPEC members Kuwait, Algeria and Venezuela, along with non-OPEC Russia and Oman.

Novak's comments came as prospects for an extension received a major boost Thursday when Saudi Arabia and other Gulf Cooperation Council countries gave strong indications they would back a continuation of the cuts.

Saudi energy minister Khalid al-Falih said the deal could be extended by three or six months if global inventories have not adequately shrunk. OPEC has said the aim of the production cuts was to get inventories down to their five-year average.

The International Energy Agency, in its most recent monthly oil market report, said OECD inventories were still some 336 million barrels above the five-year average, as of the end of February.

Novak said he believed the current oil price "reflects [the balance] between demand and supply" as the situation in oil markets "is gradually improving."

The crude surplus has been declining since March, he said.

"The situation is getting more and more stable. [There is] less volatility in the market," he said. "At the moment we're analyzing conditions of the market trying to develop a forecast."

RUSSIA-JAPAN COOPERATION

Earlier in the day, Novak met with Japan's Minister of Economy, Trade and Industry Hiroshige Seko, who is also also Minister in Charge of Industrial Competitiveness and Minister for Economic Cooperation with Russia.

The two co-chaired Russia-Japan Energy Consultative Council, which aims to boost cooperation between the two countries, follows an unprecedented level of high-level contacts last year.

During a visit by Russia's President Vladimir Putin to Japan in December, the first one in 11 years by a Russian president, a total of 80 joint documents on cooperation were signed, of which 23 covered the energy sector. The agreements included joint exploration offshore Sakhalin, technological and financial collaboration in oil, gas and LNG, and established a mutual fund for such projects.

Three working groups within the consultative council have been examining intensively how to give a boost to specific projects, Novak said.

Russia delivered 9.8 million mt/year of crude, 7 million mt/year of LNG and 18.6 million mt of coal to Japan in 2016, Novak said, providing no figures for comparison.

--Takeo Kumagai, takeo.kumagai@spglobal.com

--Herman Wang, herman.wang@spglobal.com

--Nadia Rodova, nadia.rodova@spglobal.com

--Edited by Jonathan Loades-Carter, jonathan.carter@spglobal.com