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Tuesday 28 October 2008
Opec unlikely to win Russia help in cutting output
The Organisation of Petroleum Exporting Countries was unlikely to receive help from Russia, the world’s biggest oil exporter, despite the cartel’s plea for non-Opec producers to share the burden of cutting output.
Opec unlikely to win Russia help in cutting output
Agence France-Presse in Vienna 27 October 2008
The Organisation of Petroleum Exporting Countries was unlikely to receive help from Russia, the world’s biggest oil exporter, despite the cartel’s plea for non-Opec producers to share the burden of cutting output.
Norway, another major non-Opec oil producer, moved quickly to rule out reducing its output after the organisation on Friday decided to slash its own production by 1.5 million barrels a day from November 1 as it seeks to shore up crude prices.
Russia meanwhile “is looking for Opec to do the dirty work”, IHS Global Insight analyst Andrew Neff said.
“Russian production is already basically flat this year and it’s likely to decline overall for the first time in 10 years.
“They could cut production, but, going into winter time, it’s only going to hurt Russia more. They have to stabilise production in Russia itself,” Mr Neff said.
Opec, which produces 40 per cent of the world’s oil, on Friday insisted that it “cannot be expected to bear alone the burden of restoring equilibrium” regarding oil supply and demand.
The cartel called on “non-Opec producers and exporters to contribute to efforts to restore prices to reasonable levels and eliminate harmful and unnecessary fluctuations”.
Opec announced its cut in production in a bid to support crude prices which it said “have witnessed a dramatic collapse - unprecedented in speed and magnitude”.
Yet after the cartel agreed to slash its official output quota to 27.3 million bpd, the price of Brent North Sea crude sank to US$61 a barrel, the lowest point in 17 months, on fears that a global recession will further hit energy demand.
Crude futures in London and New York have plunged close to 60 per cent from record highs of above US$147 a barrel reached only three months ago when supply concerns sent prices soaring.
Asked by reporters on Friday whether major non-Opec oil producers would also cut output, Opec president Chakib Khelil said: “We are asking non-Opec to contribute and if Russia considers it’s in their own interest to do that, I’m sure that they will.”
On Wednesday, Opec secretary-general Abdalla Salem El-Badri met Russian President Dmitry Medvedev in Moscow. Mr Medvedev stressed at the meeting “the importance of the co-operation between Opec and Russia, and highlighted the Russian readiness for a continuous and comprehensive dialogue with Opec, for the purpose of achieving stable and predictable oil markets”.
Mr Medvedev and Mr El-Badri “shared the concern that the current turmoil might have negative impacts on the volume of investments in the oil sector, and might lead to cancellation of projects and freeze the launching of new oil and gas projects”.
According to Opec, the two men “also agreed that the development of the dialogue and co-operation between Opec and its member countries and the Russian Federation is essential to overcome such a crisis, and to ensure stability of the oil market, something which is crucial for producers and consumers alike, both in the short and the long term”.
Analysts were sceptical, however, over the possibility of Russia and other oil producers cutting output.
Societe Generale analyst Frederic Lasserre said Mexico was not in a position to participate since its production was already falling sharply.
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Opec unlikely to win Russia help in cutting output
Agence France-Presse in Vienna
27 October 2008
The Organisation of Petroleum Exporting Countries was unlikely to receive help from Russia, the world’s biggest oil exporter, despite the cartel’s plea for non-Opec producers to share the burden of cutting output.
Norway, another major non-Opec oil producer, moved quickly to rule out reducing its output after the organisation on Friday decided to slash its own production by 1.5 million barrels a day from November 1 as it seeks to shore up crude prices.
Russia meanwhile “is looking for Opec to do the dirty work”, IHS Global Insight analyst Andrew Neff said.
“Russian production is already basically flat this year and it’s likely to decline overall for the first time in 10 years.
“They could cut production, but, going into winter time, it’s only going to hurt Russia more. They have to stabilise production in Russia itself,” Mr Neff said.
Opec, which produces 40 per cent of the world’s oil, on Friday insisted that it “cannot be expected to bear alone the burden of restoring equilibrium” regarding oil supply and demand.
The cartel called on “non-Opec producers and exporters to contribute to efforts to restore prices to reasonable levels and eliminate harmful and unnecessary fluctuations”.
Opec announced its cut in production in a bid to support crude prices which it said “have witnessed a dramatic collapse - unprecedented in speed and magnitude”.
Yet after the cartel agreed to slash its official output quota to 27.3 million bpd, the price of Brent North Sea crude sank to US$61 a barrel, the lowest point in 17 months, on fears that a global recession will further hit energy demand.
Crude futures in London and New York have plunged close to 60 per cent from record highs of above US$147 a barrel reached only three months ago when supply concerns sent prices soaring.
Asked by reporters on Friday whether major non-Opec oil producers would also cut output, Opec president Chakib Khelil said: “We are asking non-Opec to contribute and if Russia considers it’s in their own interest to do that, I’m sure that they will.”
On Wednesday, Opec secretary-general Abdalla Salem El-Badri met Russian President Dmitry Medvedev in Moscow. Mr Medvedev stressed at the meeting “the importance of the co-operation between Opec and Russia, and highlighted the Russian readiness for a continuous and comprehensive dialogue with Opec, for the purpose of achieving stable and predictable oil markets”.
Mr Medvedev and Mr El-Badri “shared the concern that the current turmoil might have negative impacts on the volume of investments in the oil sector, and might lead to cancellation of projects and freeze the launching of new oil and gas projects”.
According to Opec, the two men “also agreed that the development of the dialogue and co-operation between Opec and its member countries and the Russian Federation is essential to overcome such a crisis, and to ensure stability of the oil market, something which is crucial for producers and consumers alike, both in the short and the long term”.
Analysts were sceptical, however, over the possibility of Russia and other oil producers cutting output.
Societe Generale analyst Frederic Lasserre said Mexico was not in a position to participate since its production was already falling sharply.
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