Russia will stick to constructive dialogue with OPEC but keep its policies independent, its energy minister said on Tuesday after OPEC called on producers like Russia to join production cuts.
Russian Energy Minister Sergei Shmatko was speaking just before OPEC Secretary General Abdullah al-Badri landed in Moscow for talks with top Russian officials. “I know they (OPEC) are very interested that we cooperate with them as closely as possibly,” Shmatko told Reuters in the Armenian capital, Yerevan, where he was traveling with the delegation of Russian President Dmitry Medvedev. “We will stick to the formula of bilateral strategic partnership between Russia and OPEC. We see a lot of positive things (in this partnership) but we want to have the possibility of having fairly independent policies,” he said.
OPEC countries, which pump about 40% of the oil produced globally, are widely expected to agree on cutting output at an emergency meeting on Friday in an attempt to support oil prices that have halved since peaking in July. OPEC President Chakib Khelil said on Monday non-OPEC oil producers like Russia, Norway and Mexico should contribute to production cuts because, if oil prices fall below $70 a barrel, many international oil projects “will be delayed or die.”
Shmatko said he was aware that OPEC would decide to cut production but could not say by how much. “This is an extraordinary meeting and it may take some important decisions, maybe (to cut) in two stages,” he said. He added that Russia would rather cooperate with OPEC on research and technology issues. „It is one thing cutting or not cutting oil output. But there is also the general assessment of the production sector, of new technologies that need to be developed and investment that is required,” Shmatko said. “Possible international cooperation in order to share these technologies and mutually develop is what we are really interested in.”
Shmatko said falling oil prices and the global financial crisis were likely to persuade Russian oil companies to cut spending significantly. “The oil price is now falling. I think investment programs will of course be revised ... I also think there will be a significant correction in the oil sector as far as the current spending is concerned,” he said. Shmatko said his ministry was not going to revise its positive oil production forecast for this year, despite a 0.8% year-on-year decline in the first nine months of 2008. He said his ministry had started talks with companies on the possible impact of the financial crisis on production). „So far, there’s been no panic,” he said.
Oil production in Russia, the world’s second-largest oil exporter and the largest producer outside OPEC, rose rapidly in the first part of the decade, including a record 11% increase in 2003. Growth has slowed in the last few years as oil deposits in western Siberia become depleted and companies switch their attention to developing hard-to-reach deposits further east. “Everyone is talking about slowing demand. This is what automakers, metal producers are suffering from,” said Shmatko. “But oil is always sold. There’s the question of price, but we had this price 18 months ago and nothing happened. We were increasing production.” (Reuters)