Russia suggests to hold 1st OPEC/non-OPEC monitoring group meeting around Jan 20

Russia suggested to the five-country committee monitoring the OPEC-led global oil production cut to meet around January 20 to look into the participants' compliance but no final decision on the date has been taken so far, Russia's energy minister Alexander Novak said.

"The dates have not been agreed on. The work is under way. We believe we have to meet around the 20th," Novak said late Tuesday.

Following the landmark six-month agreement by OPEC countries to cut their crude output by 1.2 million b/d from October levels, 11 non-OPEC countries led by Russia agreed to join the initiative by cutting their combined output by 558,000 b/d. Of this, Russia's commitment is 300,000 b/d cut.

There is still a widespread skepticism in the market whether the countries will be able to fully deliver on their commitments. The monitoring committee's discussion is to focus on the mechanism of monitoring each country's production cuts and enforcing the agreement, although what the committee can and will do in the case of non-compliance remains an open question.

Chaired by Kuwait, the committee also includes Venezuela and Algeria from OPEC, as well as non-OPEC Russia and Oman.

Regarding OPEC, the group has agreed to use the six independent sources its analysts have adopted to track production in the organization's monthly oil market reports.

Those secondary sources -- which include S&P Global Platts-- compile monthly estimates of each country's output for the preceding month. So, production in January will be reported by the secondary sources in early February.

The market will clearly be watching those February reports for the first signs of non-compliance, but it could take a few months before more definitive trends emerge, since the quotas are meant to be an average of production over the six months of the deal.

RUSSIAN GROUP

Novak also said his ministry plans to hold meetings with Russian key oil producers to evaluate compliance by Russian companies once in two weeks.

"We've already held one meeting with our companies and plan the next one by the end of the year," he told reporters.

The meeting involved participants from 12 companies, which together account for 90% of the country's output, Novak said.

He added that the ministry would be monitoring production rates by smaller producers as well, including production sharing agreements developed by international consortiums.

Russia committed to cut gradually its production from October's level of 11.2 million b/d.

Russian companies agreed to cut their output proportionally, so that each producer will have equal conditions.

Like with OPEC countries, there are concerns about how to verify production by non-OPEC countries.

The International Energy Agency and the US Energy Information Agency track the production of various countries in their monthly oil market reports. But in the case of Russia, its production will be tracked by official government statistics, according to the terms of the deal.

--Nadia Rodova, nadia.rodova@spglobal.com

--Edited by Irene Tang, irene.tang@spglobal.com