SOCHI, Russia (Reuters) - Igor Sechin, the head of Russia’s largest oil producer Rosneft, said on Wednesday once the global deal to cut oil production expires, it should be ended in a way to avoid causing price volatility.
He said he had asked Russian Energy Minister Alexander Novak to negotiate a smooth exit mechanism with OPEC and the other leading oil producers party to the output cut agreement.
Saudi Arabia and Russia, the world’s top two oil producers, have agreed on the need to extend output cuts for a further nine months, until March 2018, to rein in a global glut.
“We have asked our minister to agree with partners such a mechanism within the framework of this deal so that the exit from it, once it expires, would be quite smooth and won’t lead to serious volatility,” Sechin, a long-standing ally of President Vladimir Putin, told reporters.
He said the “information about the agreement extension has already had an impact on the market, the price has corrected up”, adding the main objective of the deal was to stabilise oil prices by the end of the agreement.
The deal between the Organization of the Petroleum Exporting Countries and other leading oil producers, including Russia, foresees combined oil production cuts of almost 1.8 million barrels per day in the fist six months of 2017.
Rosneft has been struggling to complete its $12.9 billion acquisition of India’s Essar Oil because six of Essar’s Indian creditors have yet to approve the deal, sources close to the talks said.
Sechin played down the difficulties with the deal.
“When you are engaged in deals, you’ll understand what it is. When there is a group of participants, there are banks. Proceedings should be agreed with all of them,” he said.
“It would be quite quick,” he responded to the question about the completion of the deal.
Rosneft has said it was expected to be completed by the end of June.
“There are several participants, there is a need to obtain anti-monopoly approval, other authorisations ... The deal is not simple, everything will be normal, this is a good project,” Sechin said.
Reporting by Denis Punchuk; writing by Vladimir Soldatkin; Editing by David Evans