Russia may also Cut Production

Friday, October 9, 2009

Faced with falling oil prices, Russia is preparing to announce that it will work with the Organization of the Petroleum Exporting Countries to coordinate a reduction in output, the minister of energy said Wednesday.

This is the first time that the Kremlin has offered to reduce output.

Russia announced that by December 17, the date of the next scheduled OPEC meeting, Russia will announce a plan to reduce the country’s oil production. Mr. Shmatko, russian oil minister said Russia would also seek to persuade other non-OPEC producers to reduce output. In fact, Russian oil output is declining in any case, as costs rise and deposits are depleted.

“Russia wants to make official what has already happened,” Vitaly Y. Yermakov, research director for Russian and Caspian energy at Cambridge Energy Research Associates, said.

Russia pumps about 9.8 million barrels of oil a day, the second-greatest output in the world after Saudi Arabia, and exports about seven million barrels of crude oil and refined products, mostly to Europe.

Kremlin officials have suggested that they may help OPEC, though petroleum analysts say the official comments may be intended mostly to mollify OPEC members, and encourage them to make production cuts, rather than indicate any serious Russian intention to help fix prices.

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