Russia declines OPEC membership; proposes 'permanent envoy'

Russia has proposed sending a permanent envoy to the OPEC Secretariat in an effort to coordinate policies, again declining membership in the group.

Mar 16th, 2009

Eric Watkins
OGJ Oil Diplomacy Editor

LOS ANGELES, Mar. 16 -- Russia has proposed sending a permanent envoy to the Secretariat of the Organization of Petroleum Exporting Countries in an effort to coordinate policies, again declining membership in the group.

"We can live without [OPEC] membership but we want to have closer dialogue with OPEC to exchange data, information, and ideas and that's why we raised the idea of having a permanent representative here at the secretariat," said Russian Deputy Prime Minister Igor Sechin.

"We believe that with this initiative a sustainable and prompt exchange of views between the parties concerned could be established," said Sechin. "We believe it to be very important in a time of the [global] crisis."

The Russian proposal of a permanent envoy is an attempt at compromise with OPEC, according to Sechin. "The OPEC secretariat insists on Russia's accession [to the organization] and we insist on signing a memorandum [between OPEC and Russia's energy ministry]."

While the Russian official did not rule out the possibility of his country joining OPEC at some point in the future, he said that membership would take place "only if all our agreements with the cartel are fulfilled."

Sechin did not spell out any of Russia's agreements with OPEC. Instead, he proposed several ideas for consideration, including the creation of new trading centers for oil, harmonized taxation of oil producing companies, and preferential long-term contracts for oil supplies.

"It is necessary to create a trading floor where the amounts sold would be strictly in line with the real supplies. That would rule out speculation," he said, conveniently adding that Russia's St. Petersburg commodity exchange could be used for the purpose.

Sechin also called on OPEC, as well as non-OPEC states friendly to the group, to coordinate their crude oil tax policies. He said such coordination should cover all facets of oil policy and "would ensure stability" of the oil market.

He also said, "The preferential application of long-term oil shipment contracts would be a strong instrument in making the market more stable and more predictable."

Such contracts, he said, "would help take due account of real outlays related to the extraction and transportation of oil while forming the price, and allow producers to plan investment in long-term projects."

Meanwhile, Sechin said Russia has proposed holding an international conference in the autumn, with OPEC and other oil producers invited.

"We proposed holding an international conference in Moscow in autumn 2009 with the participation of OPEC members, independent oil producing states, and major oil companies and investors," he said.

"The idea of the conference is to discuss long overdue issues pertaining to energy security and stable development of the oil market," Sechin said.

Contact Eric Watkins at hippalus@yahoo.com.

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