MOSCOW, Dec 26: Russia will boost oil output over the next 10 years to meet rising global demand but Opec is not concerned about losing market share to Russia, officials said on Monday, as the two sides vowed to work more closely on production and pricing.
“We think we have no worries about the future,” the Organization of Petroleum Exporting Countries president, Sheikh Ahmad Fahd al-Sabah, told AFP following talks with Russian officials focusing on closer cooperation between Russia and Opec.
Russian crude production will continue to rise but “we believe that the markets will accept the whole new production in the future,” Sheikh Ahmad said, adding that Russia and the 11-member cartel were in a “cooperation situation, not a competition situation.”
In a joint statement published after the talks, Russia and Opec outlined a series of areas in which they planned to tighten cooperation but Sheikh Ahmad said increased production by Russia, which is not an Opec member, would not work to the cartel’s detriment.
“I think the per cent of the share in the market will continue as it is,” the Opec chief told AFP following meetings with Russian Industry and Energy Minister Viktor Khristenko, Foreign Minister Sergei Lavrov and the head of the federal energy agency, Sergei Oganesyan.
Russia is the world’s second-largest crude exporter behind Saudi Arabia and in an interview with the business daily Kommersant Sheikh Ahmad said Russia had briefly overtaken Saudi Arabia recently as the world’s main oil exporter.
Kommersant said Opec countries were increasingly wary of Russia’s growing influence on world oil markets and sent the top-level delegation to Moscow in part to find out more about the country’s longer-term planning.
“Opec is worried that Russia is going to increase its share of the global market at the expense of the cartel,” Kommersant said.
Russian and Opec officials emphasized the importance they saw in Moscow’s upcoming chairmanship of the Group of Eight (G8) industrialized countries, from January 1, with Sheikh Ahmad calling it a “historic event” that could improve communication between producer and consumer nations.
Sheikh Ahmad told the daily Vremya Novosti that insufficient refining capacity, high taxes and strict environmental regulations in consumer countries were a major factor in record-high oil prices in the past year, as opposed to just Opec production quotas and rising global demand.
“Through its chairmanship of the G8, Russia can, at a minimum, explain the position of fuel-supplying countries to consumers,” said the Opec president, who is also the Kuwaiti energy minister.
In the joint statement, Russia and Opec said they planned to begin holding annual meetings at the ministerial level and said they would boost cooperation in other fields including research and development, formulation of energy policy and investment in refineries.
Discussion of energy policy should include not just G8 and Opec countries but also take in major world consumers who belong to neither group, specifically China, India and South Korea, officials from both sides said.
Sheikh Ahmad said Opec saw a drop in demand for its production of around two million barrels per day (bpd) in the second quarter of next year to around 27.8 million bpd, a regular seasonal adjustment, but he declined to say whether Opec would cut production in response, Interfax news agency said.
Kommersant said Opec officials had made clear they wanted to see crude prices floating next year in a range of $44 to $55 per barrel but said controlling prices at this level required coordination among Opec and non-Opec producer states and consumer countries.—AFP
