The fact that Russia’s officials and representatives of major state companies took part in the CERAWeek IHS Markit conference in March 2017 highlights the nation’s enduring prominence as an energy sector leader. The event’s organizer Daniel Yergin, a leading energy scholar and expert, said as much in his remarks to the audience of energy business leaders gathered in Houston.

The Minister of Energy of the Russian Federation Alexander Novak in his turn addressed CERAWeek’s participants in a speech that focused on the OPEC and non-OPEC agreement to constrain hydrocarbon production volumes. During his remarks, Minister Novak indicated that he anticipated the five countries tasked to track the implementation of the extraction cut agreement to prolong its effectiveness beyond the first half of 2017.

In speaking to the press at the CERAWeek by IHS Markit event, Minister Novak stated that balancing crude supplies with demands and raising investments in petroleum production are the critical variables to determine whether to extend the agreement between the OPEC and the non-OPEC states. No single factor is determinative in regard to prolonging the production cuts because the measure’s primary purpose was to stabilize the volatile situation on the world’s oil market.

As Russia’s Energy Minister, Alexander Novak was the most important person behind the agreement between the OPEC member-countries and the non-OPEC producers. The deal envisions the curtailment of oil extraction by OPEC members to the tune of 1.2 million barrels per day (bpd) relative to the figures reported in October 2016. Countries that are not OPEC members reduced production by 558 thousand bpd. The overall reduction in oil supply equals approximately two percent of the world’s extraction volumes.

According to the Russian Energy Minister, it did not take long for the states that became parties to the production cut agreement to actually lower their production totals. Despite the voluntary nature of the agreement, it was essential for the parties to the multilateral accord to reduce output and end the instability on the market in a short timeframe.

As for Russia, its production declined at a faster pace than initially anticipated to the point that its daily output in May 2017 was down by 300 thousand bpd compared to October’s numbers.

In his statement, Minister Novak emphasized that Russia is monitoring the rising production figures in the United States and anticipates the total daily increase for U.S. production to stand at 400 thousand bpd. The U.S. production, in the Russian Minister’s view, constitutes an integral part of the overall crude balance. The Russian official acknowledged that the effectiveness of the agreement to limit production would rise in the event U.S. companies join in the initiative

During a press conference at the Hilton hotel in Houston, Texas on March 7, 2017, Alexander Novak stated that he did not hold talks with any U.S. officials, adding however that he was optimistic about Russia’s and the United States’ resuming discussions in the energy sector. The Minister was even more enthusiastic about the Russian oil market’s prospects, saying that the country presents a chance for businessmen to receive high returns on investment.

One of the companies that has taken a hit as a result of the United States’ sanctions directed at Russia was ExxonMobil, whose Arctic projects were halted as of 2014. While the new U.S. Secretary of State was at the head of ExxonMobil when the restrictive measures got imposed, Minister Novak did not say that that Russia had any expectation of lessening sanctions under Donald Trump and Rex Tillerson. The Energy Minister instead called the matter as falling entirely within the United States’ internal policymaking authority. Mr. Novak added only that U.S. companies that had done business in Russia were adversely affected on account of the sanctions. The Russian Minister did clarify that it was not his government that was taking any actions to the detriment of U.S. companies. Specifically, Alexander Novak said that Russia has no intentions of rescinding the licenses granted to the joint venture of ExxonMobil and Rosneft.

The Russian Energy Minister observed that domestic companies were pursuing Arctic development even in the absence of foreign partners. According to the Minister, Russian oil companies currently produce some 1.8 mbpd from Arctic zones. At the same time, Mr. Novak admitted that the price point for hydrocarbons has led to a lessened intensity of development for projects located offshore. Overall, in the Minister’s assessment, the West’s restrictive measures forced Russian producers to develop deep water technology and enhance existing production methods in a substantial way. Minister Novak concluded by noting that Russia’s oil production costs are comparable to those observed in Middle Eastern countries.