Despite OPEC and non-OPEC countries lowering their individual oil production levels to push crude prices higher, there are still challenges remaining in the global oil market, Russian Energy Minister Alexander Novak said Monday.
"Through the cooperation with OPEC and this joint action, the ultimate goal was balancing the market,” he said at IHS CERAWeek 2017 energy conference.
“There is a need with different countries cooperating with each other because the market is so globalized,” he added.
OPEC and non-OPEC countries, including Russia, agreed in November to cut oil production by 1.2 million barrels per day (mbpd) in the first six months of the year. The accord entered into force in January, and oil prices began to increase gradually.
"Current prices of $50-$60 a barrel reduced volatility, and helped investment return to the industry, and provided stability for the market," Novak said.
"But, there are still so many challenges. We are monitoring the current environment," the minister said.
He noted that an investment worth more than $500 billion was lost after prices went down from $115 a barrel in mid-2014 to below $30 a barrel at the beginning of 2016.
Despite low oil prices, Russia has managed to increase its oil production in the last two and a half years.
Novak shed light on how his country and Russian firms managed to endure low prices.
"Financial standing of Russian companies are better than its peers, and the debt burden is very low. They are competitive. Production cost is $10-$15 a barrel. We also have a very flexible tax policy," he said.
"Despite low oil prices, Russia had a lot of foreign investment coming in as well, mostly from Asia-Pacific countries and Indian companies," he added.
The energy minister also stated that Russia has will continue to develop its oil and gas infrastructure from its hydrocarbon reserves offshore and in the Arctic.
"New fields are developed in eastern Siberia and north of Yamal. They will be a strong basis for our competitiveness," he said.
Novak emphasized the importance of liquefied natural gas (LNG) in the global gas market.
"Gas will remain the major fuel in future. It is the cheapest, and it is environmental-friendly... LNG share will grow in global markets," he said.
By Ovunc Kutlu in Houston, Texas