Oil Firms Not Afraid Of OPEC Conference

As ministers of the Organization of Petroleum Exporting Countries start arriving in Vienna for Wednesday's meeting, Russia's oil conference season kicked off Monday with the country's big producers in high spirits.

Even if OPEC raises output by up to a million barrels per day as some expect and prices come off from current high levels as a result, the local oil sector f the mainstay of the economy f is riding high, and industry bosses expect it to stay that way.

Leonid Fedun, deputy head of the country's largest producer LUKoil, told a conference organized by Renaissance Capital investment bank he saw several reasons why good times would continue.

High global prices and rising export capacity would boost exports, therefore dragging up domestic prices. The local tax environment is expected to ease, he said, with long-awaited laws on production sharing agreements due soon.

Ruble devaluation in August 1998 is still having a positive impact on the economy, he added, driving domestic costs down while dollar revenues are sky high. And industry consolidation, with a privatization drive still under way, is offering big firms more opportunities.

"The industry remains profitable and attractive," he said.

Fedun added that he expected OPEC to succeed in keeping prices in a target range of $22 to $28 per barrel for several years to come. His prognosis for LUKoil output over the next 15 years was almost entirely positive.

Sergei Fyodorov, deputy head of the nation's No. 3 producer Surgutneftegaz, was also upbeat, saying the company was undertaking a major program of capital investment aimed at improving extraction rates from existing fields and developing new fields to increase output.