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OPEC Concerned Over Russian Oil Production - 2002-08-06

The head of the Organization of Petroleum Exporting Countries has failed in his effort to get Russia to cut its oil production. The OPEC secretary general met with Russia's energy minister in Moscow.

After the meeting, Russian Energy Minister Igor Yusufov said Russia will continue monitoring the world oil situation. But he gave no indication that Russia will implement further cuts in oil production, something OPEC has been pushing for.

Mr. Yusufov said Russia had abandoned previous oil production cuts because it felt world oil prices had stabilized and there was no longer any need to reduce output.

Last December, the Russian government, although not a member of OPEC, agreed to cut oil exports by 150,000 barrels a day. The move was part of an OPEC plan to curb output and boost sagging oil prices, which were hovering around $19 a barrel. OPEC member countries cut their production by 1.5 million barrels a day.

But at the beginning of July, Russia went back to normal production after oil prices rebounded. The move was not welcomed by OPEC. The oil organization decided to keep its production cuts through September, saying it is worried there will be another slump in oil prices.

During Tuesday's meeting, the OPEC secretary general, Alvaro Silva, played down the differences. He said the oil organization would not use a price war to punish Russia for boosting production and praised Russia for helping stabilize world oil prices.

But many analysts say OPEC is worried that Russian companies are aggressively expanding their production and looking for new markets, at the expense of OPEC countries.

Russia is the world's number two oil producer behind Saudi Arabia and in the past few years has increased its oil output significantly.

OPEC member countries will meet in September in Japan where they are expected to discuss possible increases in production quotas.