Moscow — Russia suggested to the five-country committee monitoring the OPEC-ledglobal oil production cut to meet around January 20 to look into theparticipants' compliance but no final decision on the date has been taken sofar, Russia's energy minister Alexander Novak said.
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"The dates have not been agreed on. The work is under way. We believe wehave to meet around the 20th," Novak said late Tuesday.
Following the landmark six-month agreement by OPEC countries to cut theircrude output by 1.2 million b/d from October levels, 11 non-OPEC countries ledby Russia agreed to join the initiative by cutting their combined output by558,000 b/d. Of this, Russia's commitment is 300,000 b/d cut.
There is still a widespread skepticism in the market whether thecountries will be able to fully deliver on their commitments. The monitoring committee's discussion is to focus on the mechanism ofmonitoring each country's production cuts and enforcing the agreement,although what the committee can and will do in the case of non-complianceremains an open question.
Chaired by Kuwait, the committee also includes Venezuela and Algeria fromOPEC, as well as non-OPEC Russia and Oman.
Regarding OPEC, the group has agreed to use the six independent sourcesits analysts have adopted to track production in the organization's monthlyoil market reports.
Those secondary sources -- which include S&P Global Platts-- compilemonthly estimates of each country's output for the preceding month. So,production in January will be reported by the secondary sources in earlyFebruary.
The market will clearly be watching those February reports for the firstsigns of non-compliance, but it could take a few months before more definitivetrends emerge, since the quotas are meant to be an average of production overthe six months of the deal.
Novak also said his ministry plans to hold meetings with Russian key oilproducers to evaluate compliance by Russian companies once in two weeks.
"We've already held one meeting with our companies and plan the next oneby the end of the year," he told reporters.
The meeting involved participants from 12 companies, which togetheraccount for 90% of the country's output, Novak said.
He added that the ministry would be monitoring production rates bysmaller producers as well, including production sharing agreements developedby international consortiums.
Russia committed to cut gradually its production from October's level of11.2 million b/d.
Russian companies agreed to cut their output proportionally, so that eachproducer will have equal conditions.
Like with OPEC countries, there are concerns about how to verifyproduction by non-OPEC countries.
The International Energy Agency and the US Energy Information Agencytrack the production of various countries in their monthly oil market reports. But in the case of Russia, its production will be tracked by officialgovernment statistics, according to the terms of the deal.
--Nadia Rodova, email@example.com
--Edited by Irene Tang, firstname.lastname@example.org