Russia’s Prime Minister Vladimir Putin said his country, which currently leads world oil producers in output, plans to work closely with the Organization of the Petroleum Exporting Countries.
“OPEC is sometimes irritated by us as we, not being a member of the organization, produce more oil, which influences international crude oil prices,” said Putin. “But we will coordinate our work with OPEC.”
Putin did not detail how his country would collaborate or even whether it planned to attend OPEC’s next meeting. Russia has long spoken of coordinating with OPEC, often sending high-level delegations to attend its meetings as observers.
In 2008, Russia sent its most senior delegation in a decade to OPEC’s Sept. 9 ministerial meeting in Vienna. There, Russian Vice-Premier Igor Sechin proposed extensive cooperation between Russia and OPEC to meet global energy needs.
At the time, Qatar’s Oil Minister Abdullah bin Hamad Al-Attiyah even expressed the hope of seeing Russia one day become a full member of OPEC as it would “add value” to the organization.
But Al-Attiyah also noted the chances were slim of Russia joining OPEC: “So far the Russians support cooperation, but they don’t talk about full membership,” he said (OGJ Online, Oct. 27, 2008).
Putin’s remarks coincided with a report by the International Energy Agency that Saudi Arabia will overtake Russia as the world's largest producer of oil producer in about 2015.
In its World Energy Outlook, the IEA said that Saudi Arabia would overtake Russia as output at new Russian fields fails to offset fast decline at mature deposits.
Russia passed Saudi Arabia as the top producer of oil when OPEC cut crude output during the economic crisis in 2009.
But IEA said Russia’s production will level off at 10.5 million b/d in 2015, and that Saudi Arabia's will match that. By 2035, IEA said, Saudi production will hit 14 million b/d.
“Russian fiscal policy is a key determinant of when and how quickly Russian production will decline. Current terms limit the incentive to invest when prices rise; our projections assume sympathetic evolution of taxation,” IEA said.
Saudi Arabia and Russia have been competing with each other for increased market share in Asia Pacific, largely due to the onset of supplies via Russia’s recently launched East Siberia-Pacific Ocean pipeline.
Indeed, traders last year expected Saudi Arabia to lower the prices of all its crude grades heading to Asia for August on slow demand from regional refiners as well as the intensifying competition from Russia's ESPO crude.
“Saudi Arabia is trying to secure demand in the Asia-Pacific region,” said another trader, adding, “It is closely watching ESPO activity (OGJ Online, July 19, 2010).”
Contact Eric Watkins at firstname.lastname@example.org.