UPDATE: Novak says Russia to ban oil supplies under price cap terms

(Rewrites throughout)

MOSCOW, Dec 23 (PRIME) -- Russia will ban the supply of oil and oil products to the countries and legal entities that support the price cap introduced by the E.U. and is ready to reduce oil production, Deputy Prime Minister Alexander Novak told Rossiya 24 TV channel on Friday referring to a yet-to-be signed presidential decree imposing counter measures.

Russia may go for a partial production cut, the reduction may be about 500,000–700,000 barrels per day or about 5–7% at the beginning of 2023, Novak said.

“We believe that in the current situation we would rather take a risk of a production cut than be guided by the policy of selling in line with the price cap. Today it may be U.S. $60, tomorrow it may be different,” Novak said, adding that Russia will seek to find mutually acceptable approaches with its partners.

Gas production in Russia will drop by 18–20% to 671 billion cubic meters in 2022, Novak also said. Oil production will increase by 2% to 535 million tonnes and oil products output will increase by 5%, he added.

Investments in oil production in Russia amounted to 1.4 trillion rubles in January–October, while they reached 1.5 trillion rubles in the entire 2021, Novak said.

Russia’s oil companies reconfigured their logistics and oil production is now stable and restored to the January–February level, he added.

Novak also said that the Urals oil discount, which rose slightly after the price cap introduction, will fall again. The world oil prices are likely to be in the current range of $70–100 per barrel in 2023, he added.

He also said that Russia will seek to redirect gas supplies to new markets, although Europe is “constantly asking to increase the volume of supplies through infrastructure that operates today,” which is the TurkStream and the Blue Stream pipelines, and Ukraine’s infrastructure.

Novak also said that active work on a gas hub in Turkey is underway, the decision may be made in 2023.

Russia’s electric power output will rise by 1% and consumption by 1.6% in 2022, Novak also said. Coal production will remain almost flat, he said.

(72.1306 rubles – U.S. $1)

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