Russia trims oil output, but less than others had hoped
Friday, November 23, 2001
Associated Press WriterMOSCOW (AP) -- A pledge from Russia to reduce its daily oil exports by less than 1 percent disappointed the world's other leading petroleum producers, which had hoped for a cut three times as large to help stabilize falling prices.
The government of the world's second-largest oil producing nation said Friday that companies would trim output by a mere 50,000 barrels a day for the remainder of the year. The Organization of Petroleum Exporting Countries has implored Russia to join other nonmember nations such as Mexico and Norway in making larger cuts to help shore up prices, which have plummeted nearly 30 percent in the past two months.
Russian Deputy Prime Minister Viktor Khristenko made the announcement following a meeting with the leaders of the largest Russian oil companies. He said a decision on further production plans for 2002 would be made in December.
The less-than-desired cut sent the price of Brent crude down 62 cents to $19.28 per barrel, on the International Petroleum Exchange in London. The New York Mercantile Exchange was closed on Friday.
Russia's flourishing petroleum industry has been one of the main stimulants of the country's economic recovery. Oil barons are loath to give up market share -- even as profit margins fall -- and the government is reluctant to lose valuable tax revenues, fearing it may have to revise budget projections for 2002.
Oil prices have fallen sharply since Sept. 11 as worldwide demand slumped and Russia's refusal to make big cuts has irritated OPEC members and nonmember nations that are dependent on the industry.
An OPEC official, speaking on condition of anonymity, called the planned cut too small and said OPEC had hoped Russia would reduce production by at least 150,000 barrels per day.
Russia has been under pressure from OPEC and other major non-OPEC oil producers such as Norway and Mexico to cut production in order to help stabilize the global oil market.
The 50,000 barrel figure includes a previous cut of 30,000 barrels that Russia had already promised.
Prime Minister Khristenko was quoted by the ITAR-Tass news agency as saying another meeting would be held in December to discuss exports in 2002.
"Russia cannot technically reduce oil production as quickly or in such large volumes as OPEC," Leonid Fedun, the vice president of Russian oil giant Lukoil, told the Interfax news agency. "The reduction will be spread out among companies in proportion to their overall production."
OPEC has agreed to reduce output by 1.5 million barrels a day as of Jan. 1 on condition that non-OPEC members including Norway, Russia and Mexico also agree to cuts amounting to 500,000 barrels a day.
Norway already has agreed to reduce production by 100,000 to 200,000 barrels a day, while Mexico has promised to cut its production by 100,000 barrels a day.
Russia recently surpassed Norway to become the world's second-largest oil producer. Russia has a total production of 7 million barrels a day.
In a telephone conversation Thursday, Mexican President Vicente Fox discussed the importance of stabilizing the global oil market with Russian President Vladimir Putin.
A statement released by Fox's office did not say whether the two leaders had made any decisions on oil production, but the telephone conversation reflected the dilemma both face amid falling oil prices and a global economic slowdown.