Russia is in no hurry to sign up to continued cuts in oil exports

Mar 04, 2002 01:00 AM

Despite strong pressure from OPEC to maintain a cap on oil exports imposed last December, Russia refused to commit itself to an extension of the cutback in the second quarter. Russian Prime Minister Mikhail Kasyanov told visiting OPEC Secretary General Ali Rodriguez and President Rilwanu Lukman that Moscow would make a final decision at a later date after studying "current conditions and trends."
Kasyanov told the head of OPEC that "a decision in respect (of curbs on export of Russian oil) will be made taking into account current conditions and trends of Russian and world economic growth, as well as the state of reserves and the extent of oil consumption."

Earlier, Russian Energy Minister Igor Yusufov told the OPEC delegation that Russia still had "a whole month until the end of the (first) quarter," providing a clear indication that Russia is in no hurry to sign up to continued cuts in its oil exports as OPEC members scramble to support the world price of crude. After strong pressure from the cartel, Russia agreed last December to cut oil exports by 150,000 bpd -- approximately 5 % of its exports -- between Jan. 1 and March 31, 2002.
Market analysts have speculated that Moscow only accepted the cut because of a seasonal rise in domestic consumption with no intention of continuing the self-imposed export cutbacks into the second quarter. Yusufov said Russia would like to see oil trading at a "fair level" of between $ 20 and $ 25 per barrel. Oil traded at around $ 22 per barrel in London as talks continued in Moscow.

Meanwhile, President Vladimir Putin's economic adviser Andrei Illarionov stressed that a continued cut in exports of oil would hurt the Russian economy, which relies on oil revenues to a significant extent. Illarionov warned that the Russian economy is slowing, noting that it would be bad judgment to cut back exports at this time.
"If we want the sectors linked to oil production to suffer a crunch, then we should maintain the oil export cut," Illarionov said. Yusufov saidhis ministry would closely monitor the situation as domestic stockpiles of oil build up during an unusually mild winter and fears of a price war on world markets loom. "If we realize that we are hurting our oil companies, we will change our decision," Yusufov said.

OPEC is due to reach a decision on its own production levels by mid-March, and the Moscow talks are closely watched by oil analysts in a bid to fathom Russia's position on maintaining the price-supporting measures.

Source: United Press International
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