Russia: OPEC deal worked, but we won't be joining oil cartel

Alexander Novak, Russian Energy Minister.
Karen Stern | CNBC
Alexander Novak, Russian Energy Minister.

Russian Energy Minister Alexander Novak said the production deal with OPEC has led to a steadier oil price and less volatility, but Russia has no intention of joining the cartel.

"Prices are staying at the same level, giving us a sense of stability," Novak said in a session at the CERAWeek by IHS Markit energy conference. Russia joined with the Organization of the Petroleum Exporting Countries in December to trim 1.8 million barrels a day from global production. A recent survey by Platts shows compliance in the deal at 98 percent.

Novak says one of the factors driving the world's energy producers together to forge the deal was the lack of investment in future oil projects. He said as oil prices collapsed, the industry failed to invest in the future and was short $500 billion over three years. Novak said the market could have rebalanced on its own, but it would have taken longer and resulted in "chaos." He said by 2040, there will be 30 percent more energy required in the world and the industry needs to keep investing.

Cooperation with OPEC resulted in a $50 to $60 per barrel oil price and investment is also beginning to return. While Russia is cooperating with OPEC, Novak said in response to a question that Russia has no intention of joining OPEC.

Even with sanctions from the U.S. and Europe, Russia's oil sector has grown, adding 400,000 barrels per day in the past two years, the Russian Energy minister said.

More from CERAWeek:
India on way to becoming world's No. 1 oil market
IEA outlook on oil prices: Volatility may return
OPEC Secretary: 'So far, so good' on cuts


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