Business | Oil & Gas
Pressure on Russia to cut oil production
Russia may cut oil production by as much as 400,000 barrels a day, equivalent to 20 per cent of an estimated reduction in Opec output, as demand shrinks because of the global recession, Kuwait's Oil Minister said.
- Bloomberg
- Published: 23:27 December 17, 2008
Algiers: Russia may cut oil production by as much as 400,000 barrels a day, equivalent to 20 per cent of an estimated reduction in Opec output, as demand shrinks because of the global recession, Kuwait's Oil Minister said.
Russian Deputy Prime Minister Igor Sechin, who was attending Opec's meeting in Algeria yesterday, is "promising to act positively," Mohammad Al Olaim said in an interview with Bloomberg Television. "We think they will seriously do so."
Oil ministers from Saudi Arabia, Iran and Venezuela said the Organisation of Petroleum Exporting Countries (Opec) is considering a cutback of 2 million barrels a day at the meeting in Oran. Opec is asking Russia and other countries outside the group to curb production by 600,000 barrels a day.
A production cut of 400,000 barrels a day is being talked about by the Russians and they "do think they will have to participate in a cut," Al Olaim added.
The total reduction, including those from non-Opec producers, could be as large as 2.6 million barrels a day, or 3 per cent of world oil demand. Crude oil has fallen 70 per cent from a record $147.27 (Dh540.93) a barrel reached on July 11 as a recession trims consumer demand for fuels.
Russia may cut at least 300,000 barrels a day from its current production levels, an Opec delegate familiar with the matter said on condition of anonymity. Sechin was attending yesterday's Opec meeting, which started at about 9.30am.
Russia produced 10 million barrels of oil a day last month, while Saudi Arabia pumped 8.8 million barrels a day of crude as well as more than 1 million barrels a day of lighter oil, according to International Energy Agency estimates.
Moscow not to join Opec
There will be no discussion of Russia joining Opec at the oil group's summit meeting in Algeria, Deputy Energy Minister Anatoly Yanovsky said, according to the Interfax news agency.
"There will be no discussion in Algeria about (Russia) joining Opec," Yanovsky was quoted as saying in Moscow.
Last week President Dmitry Medvedev said Russia was ready to coordinate with Opec to arrest the plunge of crude prices and could even become part of the cartel, which would amount to a major change in Russian strategy. But Yanovsky's comment suggested that joining Opec was not on the immediate agenda for yesterday's summit of the 13-member group in Oran, Algeria.
The deputy minister added that a memorandum of understanding submitted by Russia to Opec in September on the topic of closer ties did not impose any requirements on Russia to cut production.
"In it there are no requirements to cut production within the framework of Opec," Yanovsky said, according to Interfax.
Russia has indicated that it will cut oil production in line with Opec in an effort to bolster prices that have fallen from record highs above $147 per barrel in July to less than $50 now.
On Tuesday, Deputy Prime Minister Igor Sechin told reporters as he arrived to attend the meeting in Algeria that Russia may slash daily oil export by up to 320,000 barrels.
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