Market and product

The planned crude oil production deal by OPEC and non-OPEC countries, including Russia, would satisfy all the producers that are to take part in the initiative, Russia's energy minister Alexander Novak said after meeting his Saudi Arabian counterpart Khalid al-Falih and other Gulf oil ministers Sunday.

During Sunday's meeting the two ministers discussed the situation on the oil markets and various options for joint measures to help accelerating oil market rebalancing as well as bilateral cooperation.

In particular, the two discussed issues related to levels at which Russia and other countries -- which may join the agreement -- could limit their output, Novak said, as quoted by the Russian ministry's press office.

"The solutions that have been developed now will satisfy all the countries," Novak said speaking at a briefing after the talks with Falih, according to the Russian ministry's press office.

"But it is too early to speak about concrete figures as the process of coordination of the positions is under way," Novak said, adding that the work at the experts level will continue up to November 30, when OPEC plans to take a production decision at a ministerial meeting in Vienna.

Novak previously said Russia sees a production freeze at September's level as optimal for itself.

Novak is meeting OPEC Secretary General Mohammed Barkindo Monday in Vienna, as part of an annual energy dialogue between Russia and OPEC, with the two expected to continue discussions of the planned production deal.

During the Sunday meeting, Russia's and Saudi Arabia's ministers shared "an understanding that the market has been restoring slowly and investments into the industry are at record low levels, with stocks exceeding significantly average levels for five years," Novak said.

"We believe it rational to undertake measures to balance the market in the coming months in order to ensure investment [into the industry to return to higher levels] and to reduce volatility," Novak said reiterating Russia's push for a crude production deal.

Falih, in turn, said that the meeting was "within a very productive dialogue which we've conducted over the past several weeks," according to the ministry's statement.

The positions on the production freeze by Saudi Arabia and Russia "are getting closer," Falih said, as reported by Al Arabiya News.

At Falih's invitation, Novak took part in the Arab Gulf oil producers meeting at headquarters of the Gulf Cooperation Council in Riyadh Sunday, according to media reports. The GCC comprises Bahrain, Qatar, Kuwait, the UAE, Oman and Saudi Arabia.

"Saudi Arabia has started to play an important role to coordinate between Russia... and OPEC, specifically the Gulf countries," Falih said as reported by Al Arabiya News.

"We have managed today... through a common meeting to reach a common notion to what we can reach in November," Falih said.

"Russia is one of the world's biggest oil producers...and is one of the influential parties in the stability of the oil market," Falih said at the opening session.

RUSSIAN OUTPUT

Russia's crude production, meanwhile, is estimated to grow to 548 million mt, or 11.0 million b/d on average in 2017, up 0.7% from 544 million mt expected this year.

Such growth is anticipated by the country's social-economic development forecast, Novak said late Friday, speaking in the Russian city of Ufa, according to local media.

This year's output of 544 million mt would translate into an increase of 1.9% from 534.1 million mt in 2015.

Russia's crude production is at record high levels currently, hitting the 11.11 million b/d level in September, and estimated to continue growing further.

The growth is due to a recent hike in drilling to slow down natural decline at mature fields in West Siberia as well as the launch of a number of greenfield sites. Russian companies benefited from a drastic devaluation of the ruble-to-dollar ratio which, along with a flexible fiscal regime that saw tax payments down, allowed them to maintain their ruble-denominated budgets despite the oil price drop in 2014.

SAUDI ARABIA-RUSSIA COOPERATION

Falih and Novak also discussed "a wide range of issues within the strategic partnership of Russia and Saudi Arabia," the Russian ministry's press office said.

"We have agreed on technology cooperation in crude production and crude and gas processing as well as mutual implementation of a number of projects," Novak was quoted as saying in the statement.

"We have discussed prospects for cooperation in the nuclear sphere, tanker construction and power," Novak said.

During the visit, the Russian delegation visited a number of Saudi Aramco sites, including the massive Manifa oil field in the shallow waters of the Persian Gulf and the major Shaybah field in the Rub al-Khali desert, the statement said. - Platts