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. Last Updated: 07/27/2016

Oil Majors Pledge Tiny Crude Output Cut

Russian oil firms and the government agreed Monday to make a symbolic gesture in supporting OPEC efforts to boost world crude prices by agreeing on a tiny cut in output of 30,000 barrels per day.

The cut, announced as Saudi Oil Minister Ali al-Naimi held talks in Moscow, would be made in the fourth quarter of 2001 and the start of next year, a government spokesman said after a meeting between the firms and Prime Minister Mikhail Kasyanov.

No mention was made of possible export reductions, the main reason for Naimi's trip to Russia.

However, an industry source present at the meeting said the firms had agreed to freeze exports at 3 million barrels per day. The source also said output would be frozen.

"The decision is firm. We will not increase our oil production, and we'll freeze exports at current levels," the source said. The freeze would apply until "a final recovery" of world oil markets, but no precise period was set.

But the government declined to comment on the issue, even after a key meeting of Naimi with Deputy Prime Minister Viktor Khristenko, responsible for regulating Russian crude oil exports.

"The volumes of export will be affected by seasonal growth in domestic consumption of crude oil and oil products as well as by the country's entire economic growth," the spokesman for Khristenko said after the meeting.

Naimi arrived in Moscow days before a Nov. 14 meeting of the OPEC oil cartel in Vienna, which is expected to agree on its fourth output cut this year in an attempt to lift oil prices from a slump sparked by an economic downtown. Saudi Arabia has said the cut could be as much as 1.5 million barrels a day.

But the cartel wants non-OPEC producers such as Russia to remove volumes and help support prices, which have fallen by 30 percent since the Sept. 11 attacks on New York and Washington, which worsened an already poor outlook for demand.

Russia has in the past paid lip service to OPEC, saying it would cut output but then doing nothing. Russia tends to export as much as it can because it needs every oil dollar to fund its budget and meet payments on its $140 billion of foreign debt.

But the official Saudi Press Agency, monitored in Riyadh, quoted Naimi as saying Saudi Arabia and Russia agreed on the need for coordination to secure a "fair" oil price of between $22 and $25 per barrel.

The output decision was announced after top oil firms, including the two largest, LUKoil and Yukos, met Kasyanov.

Analysts said the proposed cuts were purely symbolic but added that the country may freeze exports during winter, when it needed more fuel for heating.

Russia, the world's second-largest oil exporter, produces almost 7 million bpd and exports 3 million bpd.