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CNBC Transcript: Alexander Novak, Russian Energy Minister

Below is the transcript of a First On CNBC interview with Alexander Novak, Russian Energy Minister. The interview was first broadcast on CNBC's Squawk Box Asia on 18 March 2019.

All references must be sourced to a "CNBC Interview'.

Interviewed by CNBC's Dan Murphy

Dan Murphy (DM): You met with Khalid Al-Falih today. Was it necessary to give him extra assurance that Russia will be compliant to the OPEC production accord?

Alexander Novak (AN): As far as the meeting is concerned we, of course, discussed the situation with the execution of the Agreement; we stressed once again that Russia is discharging its obligations in accordance with the agreement to smoothly achieve the target output. We discussed both our own situation and the situation across the rest of the countries re their compliance with the agreement, as well as the situation in the global markets, forecasts, uncertainties, i.e. the traditional list of issues in order to assess how the agreement is working by our Monitoring Committee.

DM: How soon before Russia becomes fully compliant to the cuts?

AN: As for the target output level that forms part of the signed Agreement we plan to reach those figures by the end of March/beginning of April. This is earlier than in the same period two years ago – by about one month.

DM: Khalid Al-Falih has talked about a possible extension to the OPEC+ production accord. Would Russia support an extension?

AN: Clearly today, two months later, it is a little premature to talk about this – the deal after all covers the first 6 months of the year, so any extension will be discussed in May/June this year. We have a planned the meeting of our Monitoring Committee to take place in May, while the ministerial meeting will happen in June when we shall have a clearer understanding of the market conditions in the summer and any predictions for the second half of the year.

DM: And at the moment US production is significantly high, we also have the duel-US sanctions against Iran and Venezuela impacting the market. Given the influence the United States has over the oil market today, would you like to see the US more involved in the conversation to stabilise the oil market?

AN: Talking about the markets, yes, indeed, there are still a lot of uncertainties in the markets linked to the decisions being taken re sanctions against certain countries that we consider a wrong move, going against market interests and in breach of international norms and international law. This impacts the market and should be borne in mind. We are a very capital-intensive sector, we require solid investments, long term investments, so all this should be borne in mind when any decisions are taken.

DM: Venezuela is in the midst of a political and social crisis at the moment as well. How are you assessing the impact of the US sanctions on Venezuela, and is Venezuela still a trusted and reliable partner for Russia in Latin America?

AN: Yes, we are witnessing serious cuts in output in Venezuela, not even as part of the Agreement but as part of the specific situation with sanctions, with the restrictions that have been introduced. We are convinced that this impacts in a major way the state of play in Venezuela; we think that Venezuela should be able to address these issues; the production has stabilized at a certain level. We wish them a speedy economic recovery and a speedy recovery of production.

DM: Is it necessary to protect Russian interests there in Venezuela given the situation?

AN: We have a long-standing relationship with Venezuela; including very close relations in the energy sector; so we have a vested interest in the ongoing oil projects in Venezuela; we hope they continue to operate; that they do not incur losses and that we recoup investments in line with the market conditions.

DM: On another matter, Nord Stream is in motion. Some who say it is not only an economic project for Russia, but a political project as well. A tool to extend leverage over Europe and the region – is that a fair charge?

AN: I reckon these are commentators who want to justify their own political actions and their economic interests to promote their own products/produce by linking some sort of political factors to the implementation of these large scale infrastructural projects. This is simply untrue; this is a purely commercial project which is being implemented on the basis of mutual benefit to those commercial companies that operate in the European energy market.

DM: Finally Sir, does it concern you that Oleg Deripaska is suing the US Treasury Department?

AN: These are the questions to be put to Mr Deripaska.

DM: Is he a victim?

AN: I know very little about this as this has nothing to do with the energy sector.


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