Russia Not Ready to Make Decision on Further Cuts
Russian oil company executives have met with Russian Prime Minister Mikhail Kasyanov to discuss Russia's oil problems, but the possibility of extending the cut on oil exports into the second quarter of 2002 did not arise. Russia, the world's second largest oil exporter, agreed to cut its shipments by approximately five percent or 150,000 barrels per day in the first quarter to help OPEC support oil prices. But concern lingers whether it will extend the cut. "Today we discussed the state of Russia's oil complex and its problems. The question of limiting exports was not discussed," Energy Minister Igor Yusufov stated. "This is a question for consideration soon, but in a narrower format," he added. Yusufov said Russia, when deciding on any further oil export cuts, would take into account the situation on oil markets, the global economy and demand for energy resources from consumers in western Europe, the United States and in Russia itself.
Industry sources speculate that Russia is unlikely to make any decision on its second quarter crude exports, until the end of the first quarter and the visit of OPEC Secretary-General Ali Rodriguez in March.
Rodriguez and OPEC President Rilwanu Lukman plan to meet top Russian government officials on March 4 and 5.
OPEC would like Russia to extend the curb until the end of June, to cover the second quarter when global demand is traditionally at its weakest. "Potentially we are going to face our stiffest test in the second quarter," OPEC research director Adnan Shihab-Eldin told the agency. "That is why it is imperative that the cuts already in place are continued into this period, to ensure that a concrete floor remains firmly under prices ahead of the summer," he added.
In Moscow, Yusufov also said Russia wanted to shift from the export of crude to the shipment of more oil products by boosting output at refineries and producing higher quality refined products. "We need to move from the export of crude oil to the maximum export of oil products," he said. "The problem is quite sensitive from the point of view of oil companies' profits and those of the Russian budget, especially because European consumers demand higher quality oil products," Yusufov added.