Russian official says deal possible with OPEC on oil production cuts

Nov. 20, 2001
Russia's deputy premier has given a clear indication that his country and other oil producers who are not members of the Organization of Petroleum Exporting Countries will reach a production agreement with the cartel in the next few days.

By the OGJ Online Staff

LONDON, Nov. 20 -- Russia's deputy premier has given a clear indication that his country and other oil producers, who are not members of the Organization of Petroleum Exporting Countries (OPEC), will reach a production agreement with the cartel in the next few days.

However, oil traders in London were skeptical about the announcement after Mexican Energy Minister, Ernesto Martens, who had discussions with the Russian minister over the weekend, said no formal agreement on significant production cuts had been reached. Martens plans to have similar discussions with the Norwegian Oil Ministry, although the latter has indicated that it would not make output cuts.

On the London International Petroleum Exchange Brent North Sea crude for January delivery fell as low as $16.65/bbl before stabilizing at $17.10.

Viktor Khristenko, the Russian deputy prime minister, said, "Supplementary measures will be decided following consultations between Moscow and members of OPEC as well as other non-OPEC producers. The situation on the oil market is a continuing worry for the Russian government."

He said the slump in world oil prices would present particular difficulties for Russia in the first half of next year.

Energy Minister Igor Yusufov, in his meeting with Martens, proposed creation of a parallel structure to OPEC with other non-cartel oil producers to help stabilize prices. The proposed informal group would mostly serve as a means to exchange information between participants.

OPEC oil ministers last week agreed to cut their production by 1.5 million b/d on Jan.1 if major non-OPEC producers like Russia, Norway, and Mexico cut theirs by 500,000 b/d. Mexico offered to cut oil exports by 100,000 b/d from Jan. 1 if OPEC confirmed its conditional cut.