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OPEC Asks Russia to Cut Oil Exports - 2002-03-05

The Organization for Petroleum Exporting Countries is calling on Moscow to maintain its cuts in oil exports. Should Russia decide to boost exports, OPEC officials fear it could lead to a drop in oil prices. But Russian officials have not yet committed themselves to maintaining current levels of production.

OPEC Secretary General Ali Rodriguez said Russian government officials need more time to decide whether to extend their current oil-export cuts. He made that clear in remarks to reporters in Moscow.

"We understand that they need some time to analyze the situation. Personally I am convinced that Russia will support these issues," the OPEC secretary general said.

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 slumping oil prices. Under the plan, OPEC member countries agreed to cut oil production by a total of 1.5 million barrels a day.

But Russia only agreed to cut exports through the end of this month. Mr. Rodriguez and OPEC president Rilwanu Lukman came to Moscow to convince Russian officials to extend their cuts through June.

Mr. Rodriguez said the world economy and the oil industry is facing a very stark reality. "The problem is that now we are facing a very particular situation, related with the recession and more specifically the situation after the 11th of September. Our main task, until now, is to avoid the collapse of prices to maintain some kind of stability in the market," Mr. Rodriguez said.

Mr. Rodriguez said the Russian government would decide sometime before April 1 on whether it would maintain its oil export cuts through June.

World oil prices are around $22 per barrel, which is within OPEC's target price range of $22-$28 per barrel. But late last year prices dropped to around $19 per barrel. OPEC credits the production cuts with the rebound in oil prices.

Russia is the world's second-largest oil producer and oil is one of its few money earners. The country's economy collapsed after the end of the Soviet Union, but economic growth has been strong in the last two years. This is due in large part to profits from oil exports at a time of high oil prices.