The Hindu Business Line : Russia may go along with OPEC in cutting production

Strategic ties: The Minister for Petroleum and Natural Gas, Mr Murli Deora, with the Russian Minister of Energy, Mr Sergey Shmatko, during a bilateral meeting in the Capital on Tuesday.

Our Bureau

New Delhi, Nov. 25

Russia may go along with Organisation of Petroleum Exporting Countries (OPEC) in cutting production to support prices. This was indicated by the Russian Energy Minister, Mr Sergey Shmatko, here at the sidelines of the ‘India-CIS roundtable on hydrocarbons’.

He told mediapersons that Russia would actively coordinate with OPEC to determine production levels and protect its interests as a major producer. Elaborating on coordination with OPEC he said, “It includes exchange of information on market development and the finalising of investment programmes. We cannot rule out cutting production as well.”

OPEC members are due to meet this weekend to address the steep fall in crude oil prices. Earlier in his address at the inaugural session, he said, “today’s oil prices are not determined significantly by traditional parameters of demand and supply but it is under the effect of whole financial crisis and speculation.”

“I would like to say that many of the budgets of oil producing countries have been balanced based on the oil price band of $70-$90 a barrel,” he said, adding that “Russian investment has also been budgeted at $70 a barrel.”

“The bubble has blown. We are at a threshold where we need to understand the situation and know why the rise in oil prices is dangerous for consumers as well as for producers,” he said. Besides, the rise in oil prices have to justify the investments made by oil companies in exploration and production (E&P) and marketing and distribution, he added.

The Minister cautioned that 2009 is going to be difficult year for oil markets in view of pessimistic views as well the recessionary trends prevailing in the world.

On whether Russia would like to move forward with its plans to form a gas cartel with Iran and Qatar, he said, “We, in fact, are planning to cartelise the export of gas producing countries. We are planning to have an Organisation of Gas Exporting Countries.”

Mr Shmatko called for an intensive dialogue between producers and consumers of oil so that the long-term interests of both are protected.

Strategic relations

As regards relations with India, he called for long-term strategic relations between India and Russia in the hydro-carbon sector. He said that he has proposed a joint working group for encouraging joint enterprise between the companies of two countries.

At the event Mr Murli Deora, Minister of Petroleum and Natural Gas, sought participation of companies from CIS region in greenfield refineries and petro-chemical projects, and the New Exploration Licensing Policy (NELP) rounds.

The Petroleum Secretary, Mr R.S. Pandey, hoped that the successful outcome of Sakhalin-1 could be replicated in other projects as well. He said that ONGC is in discussions with Rosneft/Gazprom for joint participation in Sakhalin 3 project.

The roundtable has been jointly organised by Petroleum Ministry and FICCI.

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