Russia and US agree that global oil prices must be just

Nov 28, 2001 01:00 AM

Russian Energy Minister Igor Yusufov and his US counterpart Spencer Abraham agreed that global oil prices "must be just" and strictly dictated by market mechanisms. Yusufov and Abraham met behind closed doors to discuss the turbulence in global energy prices and the potential for future US investment in the Russian oil and gas sector.
The Russian energy ministry disclosed few details of the talks, noting in part that the Yusufov and Abraham had agreed to set up a new working group to help correlate the two nations' energy policies. "Yusufov told his counterpart that the price of crude oil must be just, that is taking in mind the interests of both the producers and consumers," the energy ministry said in a statement. "Abraham supported this position, for his part noting that the price of oil should be dictated by market mechanisms," the statement concluded.

Russia, which is not a member of OPEC, has resisted pressure from the oil cartel to slash its production in a bid to support the weakenedenergy prices on international markets. The United States meanwhile has hinted that it supports the stance of Russia, which is the world's number two oil exporter, because low oil prices could help revitalize the slowing global economic growth.
Russia has agreed to cuts its production by only 50,000 bpd through the end of the year, about one-fifth of the reduction sought by OPEC and just 7 % of its total exports. However senior officials hinted that a further Russian cutback could be expected early next year, although no formal decision on the subject has yet been reached. Abraham's visit to Moscow coincided with the formal opening of a major new Eurasian pipeline, amid growing signs that energy interests of the two global rivals were aligning at last.

Oil analysts said the launch of the Caspian Pipeline Consortium (CPC) signalled that Russia and the United States no longer view each other as serious rivals in a "great game" power struggle over control of oil prices in the isolated but energy-rich Central Asian region.
The CPC, which stretches 1,510 km (905 miles) from Kazakhstan's giant Tengiz oil field to the Russian Black Sea port of Novorossiisk, will deliver nearly 70 mm tons of crude to world markets when fully operational. Officials stressed that the CPC's formal launch did not mean that either Russia's or Kazakhstan's oil exports were on the rise, although analysts said the new pipeline meant that Russia was now free to increase exports through existing links that had been previously filled with Tengiz oil.
Abraham is also due to meet Russian Atomic Energy Minister Alexander Rumyanstev for talks focusing on the security of nuclear material being stored in both countries, reports said. The talks would be conducted "in light of the anti-terrorist operation in Afghanistan," an atomic energy spokesman was quoted as saying. They would also discuss the export of "sensitive" technologies abroad.

Washington has repeatedly advised Moscow to end its atomic energy cooperation with Iran, where Russia is now construction a nuclear power reactor, the main component of which was shipped to Bushehr earlier this month. Russian President Vladimir Putin earlier this month vehemently denied charges that Moscow might violate its obligations on nuclear non-proliferation. Most of the material to be used in the first tranche of the nuclear project at Bushehr, in western Iran, will be delivered at the start of 2002, the Russian atomic energy ministry announced.

Source: AFP
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