JOHANNESBURG (Reuters) – Russia does not use stocks in tanks to help boost oil output and does not have enough stocks to influence the oil market, Russian Energy Minister Alexander Novak told reporters in Johannesburg late on Thursday evening.
Russia used stocks held in tanks at its oilfields to help boost crude production in June, three industry sources told Reuters in July, in a sign of supply flexibility as OPEC kingpin Saudi Arabia pushes other major producers to increase spare output capacity.
Russia does have some flexibility thanks to spare capacity in the Transneft (TRNF_p.MM) pipeline system and in oil tanks at fields, the sources said.
“Transneft of course has its own oil storage facilities for the technological process. But we of course do not have large (storage) capacity which would regulate the market,” Novak said.
Russia does not have storage capacity for accumulating of reserves, the minister said, adding that such a project would require a huge investment which may not provide an economic return.
Russian oil production last month rose by around 100,000 barrels per day from May. From July 1-15, the country’s average oil output was 11.215 million bpd, an increase of 245,000 bpd from May, two industry sources said.
Novak said that Russia has raised oil output by increasing oil production, not by using stocks.
Speaking about global oil prices, he said that the market remains volatile and responds to verbal interventions. But the current oil price has already taken into account risks related to possible the U.S. sanctions against Iran, he said.
The Organization of the Petroleum Exporting Countries (OPEC) and other oil producers led by Russia agreed last month to ease production curbs. The deal effectively increases combined oil output by 1 million barrels per day (bpd), of which Russia’s share stands at 200,000 bpd.
Novak said that partners in the OPEC+ deal are not currently discussing an option to boost production by more than 1 million bpd. He previously said that Russia and other leading oil producers may boost oil output further if supply shortages hit the global oil market.
Novak also said the construction of a nuclear power plant in South Africa by Russia is still on the agenda, but concrete decisions may come once South Africa passes its energy strategy, which is currently being updated.
Reporting by Denis Pinchuk; writing by Polina Devitt; editing by Richard Pullin