OPEC drafting agreement to institutionalize market cooperation with Russia, other allies

London (Platts)--15 Feb 2018 1213 pm EST/1713 GMT

OPEC is drafting an agreement that would institutionalize the producer group?s oil market cooperation with Russia and other allies beyond their current output cut agreement, which expires at the end of the year.

OPEC Secretary General Mohammed Barkindo confirmed to S&P Global Platts the draft agreement was in the works, which was first reported Thursday by UAE newspaper The National in an interview with UAE energy minister Suhail al-Mazrouei.

"The aim is together with the secretary general to put together a draft agreement for this group to stay together for a longer time," Mazrouei told the newspaper, adding that it was "a work in progress" and providing no other details.

Mazrouei, who currently holds the rotating OPEC presidency, said that he hoped the pact could be signed by the end of the year.

The OPEC/non-OPEC production cut agreement commits OPEC and 10 partners, led by the world?s largest crude producer Russia, to cut 1.8 million b/d in supplies to rebalance the market.

Barkindo has previously said that the cooperation between the 24 countries in the supply cut agreement should be made permanent, but the comments indicate that the platform may be close to being formalized.

Russian energy minister Alexander Novak could not immediately be reached for comment, but in an interview with Platts on Tuesday, he said Russia was keen to build a long-term relationship with OPEC kingpin Saudi Arabia and the broader OPEC alliance.

"We understand that global demand for oil will continue to grow rapidly and this demand will need to be met, so we will likely need to work together, including on upstream technology and joint projects to meet this growing demand," Novak said, just before meeting with his Saudi counterpart Khalid al-Falih in Riyadh.

"Taking into account the current political and economic relationship and projects that we're considering, I think our relationship will be of long-term nature," he added.

Falih, for his part, said in Oman last month that the coalition would seek to continue their stewardship of oil supply into 2019 and beyond, to give the industry a smoother market in which to invest to meet future demand.

"It does not necessarily mean that sticking barrel by barrel to the same limits or caps or targets of production country by country that we signed up to in 2016, but assuring stakeholders, investors, consumers and the global communities that this is something that is here to stay," he said.

--Herman Wang,

--Edited by Alisdair Bowles,

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