Russia wants to boost oil output over long term

Feb 03, 2002 01:00 AM

Russian Prime Minister Mikhail Kasyanov said his country remains committed to its broader strategy of increasing oil output, despite agreeing earlier this year to scale back exports temporarily. On the sidelines of the World Economic Forum, the premier also said Russia "wouldn't view it favourably" if the US embarked on a military campaign against Iraq without sharing proof of a threat from Baghdad.

Kasyanov said Russia wants to expand crude oil production over the long term in order to become "a reliable source" of energy for Europe and other countries. After being prodded by OPEC, the country agreed to cut daily crude exports by 150,000 barrels for three months starting in January 2002. Kasyanov said the government will review export targets in March. Much of the oil industry is in private-sector hands, but the government still holds some sway.
OPEC has been lobbying Russia to extend the output cut for another three months. But Kasyanov made it clear that Russia, the world's No. 2 oil producer, isn't inching toward a permanent alliance with OPEC. "To a certain extent we are coordinating for the exchange of information," he told.

Given that the economic slowdown has sapped demand, Russia is "OK" with oil prices, which are averaging $ 18-$ 19 a barrel, Kasyanov added. He expects prices to move higher as the global economy rebounds -- but not as high as OPEC wants.
"We believe a fair price for oil -- both for producers and consumers -- is a corridor of $ 20-$ 25," said Kasyanov, dismissing OPEC's goal of $ 28/bbl for its oil basket as a "dream." Russian oil output rose 7 % in 2001. Oil and gas account for roughly half of government revenue. Kasyanov said Russia hopes eventually to start selling oil to the US market, which relies heavily on imports.

Source: Itar-Tass
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