Russia rules out oil cuts despite pressure from Venezuela

Oct 22, 2001 02:00 AM

Russia ruled out an immediate cutback in its soaring oil production despite strong pressure from visiting Venezuelan President Hugo Chavez for energy-rich nations to form a joint response to a drop in world prices. "For the moment we are working to maintain the price range, and there is no question of reducing production," Russian Energy Minister Igor Yusufov said after meeting Chavez, whose country is a member of OPEC.
Chavez, in charge of coordinating policy between OPEC and non-members of the oil cartel, has toured a number of countries in the last two weeks in a bid to forge a collective solution to the oil price slump. His visit to Moscow is particularly sensitive as Russia remains the largest oil producer outside the 11-nation OPEC and has earlier hinted that its output would increase again this year.

Russia has so far brushed aside overtures from OPEC to join the club of oil exporting nations, instead striking its own energy policy that accounts for a large portion of annual budget revenues. Other senior Russian ministers said that any changes in Moscow's energy policy would take place no earlier than next month.
"We have to keep a fair (oil price) level. The decisions for achieving this will be taken in November," said Foreign Minister Igor Ivanov. The energy ministry had earlier announced that Russia would most likely produce around 345 mm tons of crude oil this year compared to 323 mm tons in 2000.
Chavez said little about Russia's oil stance in brief opening remarks during his Kremlin meeting with counterpart Vladimir Putin. OPEC has been reluctant to give oil prices a boost by declaring a formal reduction in output, a move that would appear self-serving and threatens to further unsettle economies already rattled by the September 11 terrorist attacks on the United States.

The Venezuelan president, who arrived in Moscow from Teheran where he met Iranian President Mohammad Khatami, said he would inform Putin about OPEC's next steps to safeguard the interests of oil producing states and consumers worldwide. Putin for his part told Chavez that a sharp fall in energy prices, and increased oil production, ran counter to Russia's national interests.
"We have consistently come out in favour of a just (oil) price corridor, and our representatives at the 117th session of OPEC in September this year clearly reiterated this view," Putin said. Key OPEC ministers met in Vienna in September to discuss crude prices without taking any official decision on the issue. OPEC's price per barrel has languished around $ 20 for more than three weeks, below the $ 22 floor of its target band and in theory triggering an automatic 500,000 bpd cut in output.

Source: AFP
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