Russia vows cooperation with OPEC to keep oil market balanced

Russian President Vladimir Putin and the chairman of the Board of Eni oil and gas company, Emma Marcegaglia, attend an annual VTB Capital ‘Russia Calling!’ Investment Forum in Moscow on Wednesday. (Reuters)
Updated 21 November 2019

Russia vows cooperation with OPEC to keep oil market balanced

  • Moscow not aiming to be world’s No.1 crude producer, Putin tells annual investment forum

MOSCOW: President Vladimir Putin said on Wednesday that Russia and the Organization of the Petroleum Exporting Countries (OPEC) have “a common goal” of keeping the oil market balanced and predictable, and Moscow will continue cooperation under the global supply curbs deal.

OPEC meets on Dec. 5 in Vienna, followed by talks with a group of other exporters, including Russia, known as OPEC+.

“Our (common with OPEC) goal is for the market to be balanced, acceptable for producers and consumers and the most important — and I want to underline this — predictable,” Putin told a forum on Wednesday.

In October, Russia cut its oil output to 11.23 million barrels per day (bpd) from 11.25 million bpd in September but it was still higher than a 11.17-11.18 million bpd cap set for Moscow under the existing global deal. Putin told the forum that Russia’s oil production was growing slightly despite the supply curbs deal but Moscow was not aiming to be the world’s No. 1 crude producer. Currently, the US is the world’s top oil producer.

“Russia has a serious impact on the global energy market but the most impact we achieve (is) when working along with other key producers,” he said. “There was a moment not that long ago when Russia was the world’s top oil producer — this is not our goal.”

Russia plans to produce between 556 million and 560 million tons of oil this year (11.17-11.25 million bpd), Energy Minister Alexander Novak said separately on Wednesday, depending on the volume of gas condensate produced during cold months.

Russia will aim to stick to its commitments under the deal in November, Novak told reporters.

Russia includes gas condensate — a side product also known as a “light oil” produced when companies extract natural gas — into its overall oil production statistics, which some other oil producing countries do not do.

As Russia is gradually increasing liquefied natural gas production (LNG), the share of gas condensate it is producing is also growing. Gas condensate now accounts for around 6 percent of Russian oil production.

Novak told reporters that in winter, Russia traditionally produces more gas condensate as it is launching new gas fields in the freezing temperatures.

“We believe that gas condensate should not be taken into account (of overall oil production statistics), as this is an absolutely different area related to gas production and gas supplies,” he said.

Three sources told Reuters on Tuesday that Russia is unlikely to agree to deepen cuts in oil output at a meeting with fellow exporters next month, but could commit to extend existing curbs to support Saudi Arabia.

On Wednesday, Novak declined to say that Russia’s position would be at upcoming OPEC+ meeting. Reuters uses a conversion rate of 7.33 barrels per ton of oil.


Indonesia sells Asia’s first 50-year dollar bond to fight pandemic

Updated 07 April 2020

Indonesia sells Asia’s first 50-year dollar bond to fight pandemic

  • Indonesia will use the cash raised to partially ‘fund its COVID-19 relief and recovery efforts’
  • The deal was carried out virtually, with bankers working on the transaction unable to travel to Jakarta

HONG KONG: Indonesia has raised $4.3 billion, including the longest-dated US dollar bond ever issued by an Asian nation, to help the government fund its battle against coronavirus, according to a term sheet reviewed by Reuters.
The deal was finalized in the United States on Monday and sold in maturities of 10.5 years and 30.5 years, worth $1.65 billion each, with a 50-year tranche worth $1 billion.
It was Indonesia’s largest-ever bond, according to the term-sheet which showed Indonesia will use the cash raised to partially “fund its COVID-19 relief and recovery efforts.”
The decision to sell 50-year bonds by the government came after initial conversations with potential investors found there was appetite for such a tenor, according to two sources with direct knowledge of the matter.
Asian life insurers, especially some based in Taiwan as well as US fund managers were the largest investors, the sources said. The sources could not be named because they were not authorized to speak to media.
“The mood in the market is starting to feel better, investors are starting to think we could be moving toward the end of the tunnel,” a banker working on the deal said.
The deal was carried out virtually, with bankers working on the transaction unable to travel to Jakarta which would have been normal practice.
Bankers working on the deal said the international travel ban put in place to control the coronavirus pandemic made the transaction more efficient to negotiate.
However, for syndicate bankers selling the deal to investors it was logistically more difficult because trading rooms in the major banks have been scaled back.
Indonesia’s coronavirus cases stood at 2,491 on Monday, with 209 confirmed deaths — the highest number of fatalities in Asia outside China.
Fifty-year bond deals priced in local currencies have been held in the past, Refinitiv data showed. South Korea raised 1.1 trillion won through a 50-year bond in September 2016 that at the time was worth $1 billion.
Indonesia’s government said on Monday it had raised its estimated 2020 net bond issuance to 549.6 trillion rupiah ($33.55 billion) to cover the country’s widening deficit.
It also listed a plan for sales of 449.9 trillion-rupiah ($27.47 billion) worth of “pandemic bonds” to cover additional spending for the COVID-19 response.
Citigroup, Deutsche Bank, Goldman Sachs, HSBC and Standard Chartered were the joint book runners for the deal, the term-sheet showed.