OPEC Chief to Visit Moscow Next Month

MTSechin
OPEC secretary-general Abdalla Salem El-Badri announced on Wednesday that he was planning to travel to Moscow next month to foster cooperation with Russia, although he said the work was not intended to influence prices.

Deputy Prime Minister Igor Sechin visited OPEC's 149th conference in Vienna on Tuesday to propose a regular dialog after a steep decline in oil prices from a record peak this summer. He led the highest-level delegation that Russia, which has observer status at OPEC, has ever sent to attend the group's conference.

Neither Sechin nor El-Badri said Russia would coordinate its oil exports with the Organization of the Petroleum Exporting Countries, a step that could make prices climb. Russia has not cut its supplies in coordination with OPEC in the past four years, although it agreed to do so earlier this decade.

"I don't think our cooperation with Russia will affect the consumer, because as far as we are concerned, we are trying to encourage dialog between producers and consumers," El-Badri said, Reuters reported.

When El-Badri and a group of OPEC experts come to Moscow next month, they will conduct a joint workshop on supply, demand and market issues, he told reporters after the conference ended.

OPEC members agreed to a surprise cut in oil output after prices tumbled from an all-time high of $147 per barrel in July to around $100 as the global economy slowed down.

A memorandum of understanding that Russia submitted for review to OPEC calls for cooperation that would pursue long-term stability on the market by developing market-based rules for price formation, Sechin said, according to a summary of his speech on the Cabinet's web site.

One tactic that could help steady the market would involve long-term supply contracts between major oil producers and consumers, which would exclude "unscrupulous" intermediaries, Sechin said.

Energy Minister Sergei Shmatko and Rosneft chief executive Sergei Bogdanchikov, who accompanied Sechin on the trip to Vienna, said a fair oil price must allow for the investment required to develop outlying fields as crude at mature fields becomes harder to access. They said they considered the current price as meeting that requirement.

The memorandum proposed by Sechin also calls for joint projects and exchange of technology. "Broad cooperation with OPEC is one of Russia's priorities," he said.

OPEC will study Russia's proposals, El-Badri said.

"As far as OPEC is concerned, we are willing to review this memorandum of understanding," he said. "We will try to see how we can cooperate through it."

The invitation to work together came before the conflict in Georgia, he said.

It remains to be seen, however, whether Russia will be willing to manipulate its output in concert with OPEC.

"We will hardly want to be in a position where someone tells us how much oil to produce," said Artyom Konchin, an analyst at brokerage UniCredit Aton.

Russia's oil producers, including Gazprom units and LUKoil, are active in OPEC members including Iran and Venezuela and are looking at Iraq, although other members would hardly open up to Russian investment, said Chirvani Abdoullaev, an analyst at Alfa Bank.

He said Russia's interest in maintaining stable oil prices in cooperation with OPEC must be short term if the country wants to focus on developing an economy based on high-tech, a stated goal of Prime Minister Vladimir Putin.

But the fast rollback of crude prices has clearly been a disappointment for the country's energy industry, which was projecting record growth on the summer's high prices.

In a period marked by soaring estimates for oil prices, Gazprom chief Alexei Miller stunned market watchers in June with the audacious forecast that the price of a barrel of oil would top $250 in 2009.

Miller said separately in June that OPEC had no impact on prices.