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Is Russia Now a de facto OPEC Member?
There’s been an official denial by Finance Minister Alexei Kudrin at the global economic conference in Brazil that Russia is playing a role in restricting global oil output. But the fact is that Russian oil firms are only shipping 75% of normal exports in November. It seems more than coincidental that Russia would cut oil exports just as OPEC is also cutting exports to support or raise the price of oil, particularly since the Russian government determines the export tax which in turn determines the amount of oil that is exported. Mystery solved: Vladimir Putin clarified the matter by stating that Russia will help control the global oil price and that in fact the export tax would henceforth be subject to adjustment every month rather than every two months. Here’s the story on falling Russian production followed by the story on Russian promises to maintain current production levels, followed by the Putin clarification:
Russia producers cut Nov oil exports, cite high duty
Sun Nov 9, 2008 11:29am EST
MOSCOW, Nov 9 (Reuters) - Russian oil firms are shipping only three quarters of their planned November exports as a government order to cut oil export duties failed to make exports profitable again, Russia’s pipeline monopoly said on Sunday.
Traders predicted in late October that Russian oil companies would cut their November exports after the government decided against lowering oil export duties. [ID:nLT520927]
On Nov. 1, the government cut oil export duties, responding to the concerns of top producers. But the cut was far less than oil companies had wanted. [ID:nL1229423]
Nikolai Tokarev, president of Russia’s pipeline monopoly Transneft TRNF_p.RTS, told Russian media on Sunday that all Russian producers had cut export volumes by a quarter since the start of November.
But he said the situation should not be overdramatised, calling the decrease in exports “a temporary phenomenon”.
“Oil companies are simply being overcautious due to high oil export duties,” Russian news agencies quoted Tokarev as saying during a visit to Cuba.
“The situation must change within the nearest week.”
Tokarev said Transneft would consider Cuba’s invitation to develop its pipeline network.
Sergei Bogdanchikov, president of Russia’s largest oil company Rosneft (ROSN.MM: Quote, Profile, Research, Stock Buzz), was quoted as saying five Russian energy majors would each hold 20 percent in a national consortium which would develop Venezuelan hydrocarbon resources jointly with Venezuela’s government.
He said the five Russian firms are Rosneft, gas export monopoly Gazprom (GAZP.MM: Quote, Profile, Research, Stock Buzz), LUKOIL (LKOH.MM: Quote, Profile, Research, Stock Buzz), TNK-BP TNBPI.RTS and Surgutneftegaz (SNGS.MM: Quote, Profile, Research, Stock Buzz). (Reporting by Dmitry Solovyov; Editing by David Holmes)
Russia Will Pursue “Independent” Strategy on Oil (Update1)
By Halia Pavliva
Nov. 8 (Bloomberg) — Russia, the world’s second-biggest oil producer, will pursue an “independent” strategy on oil production, ignoring the Organization of Petroleum Exporting Countries’ moves to cut output, said Finance Minister Alexei Kudrin.
“The government isn’t planning any restrictions of oil production in the near future,” Kudrin, who also serves as deputy prime minister, said in an interview in Sao Paulo today. “We don’t want to impose administrative barriers for restricting production. Oil businesses should estimate their own risks.”
Venezuelan President Hugo Chavez said Oct. 28 he had asked Russia to work with OPEC to reverse the slide in oil prices, which have fallen more than 50 percent in the past four months. OPEC, supplier of more than 40 percent of the world’s oil, announced production cuts during September and October and may say it plans a further reduction at a Dec. 17 meeting in Algeria, OPEC president Chakib Khelil said today.
“Of course we expect decline of oil prices” through next year as economies of the biggest oil consumers, such as the U.S. and European Union countries, may contract, Kudrin said.
Russia cut its forecast for the price of Urals, the country’s major blend of oil, to $50 a barrel in 2009 on average, from $95 a barrel previously, Kudrin said. Urals crude traded at $55.71 a barrel on Nov. 7, 61% below its high of $142.50 in July.
“We are holding consultations with the OPEC and our representatives are present at the OPEC meetings,” because Russia is interested in learning about new technologies of oil production and ways of financing the development of oil fields, Kudrin said.
Russia’s biggest oil-producing companies have private shareholders. The country’s oil and gas pipelines are controlled by the state.
“Unlike in many OPEC countries, many of our oil fields are being developed by private companies,” Kudrin said. “It’s too early” to talk about whether Russia would consider becoming an OPEC member during the next ten years, he added.
To contact the reporter on this story: Halia Pavliva in New York at hpavliva.
Nov 11, 2008
Russia to influence oil prices?
MOSCOW - RUSSIA’S Prime Minister Vladimir Putin said the country must act to influence oil prices hit by the global economic crisis, in what could signal a significant change of approach by the major crude exporter.
‘We need to work out a whole range of measures that will allow us to actively influence the market,’ he said in comments broadcast on television after a government meeting on oil production.
‘As one of the major exporters and producers of oil and petroleum products, Russia cannot stand aside from formulation of global prices for this natural resource.’
Oil prices have fallen sharply from record highs of US$147 (S$219) per barrel in July as the global financial crisis has slowed economic growth and demand.
Russia is not a member of the Organisation of Petroleum Exporting Countries (Opec) and has traditionally steered clear of working closely with the cartel to set production and pricing levels.
Vice-premier Igor Sechin said on Wednesday, however, that Russia was ready to cooperate with other oil producing countries to prop up the price of crude but was determined to stay in charge of its own production levels.
Opec last month decided to cut production by 1.5 million barrels a day in a bid to stem the fall in the price of oil.
World oil prices climbed in Asian trade on Monday after Opec refused to rule out further output cuts and China announced a massive stimulus package aimed at boosting domestic spending, dealers said.
Oil prices fell on Monday on profit-taking after earlier jumping by more than US$3, with New York’s main contract, light sweet crude for delivery in December slipping 33 US cents to US$60.71 per barrel. The contract earlier went as high as US$65.56.
Opec’s 13 countries account for around 43 per cent of world production with Russia on 12 per cent.
Mr Putin also suggested that the export tax on oil should be reviewed monthly, instead of every two months as at present. The government sharply lowered it this month to US$287 per tonne.
‘The world financial crisis, the instability on international markets and raw materials and the fall in the price of oil, demand that we adopt measures that will ensure lasting development of the sector in current conditions,’ Mr Putin said on Monday. — AFP
More on this topic (What's this?)
Oil Companies Storing Oil on Tankers, Waiting for Higher Prices (naked capitalism, 11/21/08)
Goldman Recants Its $200 a Barrel, "Super Spike" Call for Oil (naked capitalism, 11/20/08)
OPEC Left to Deliberate as Oil Prices Plummet (Money Morning, 11/23/08)
Read more on Oil Prices, Investing in Russia at Wikinvest
Russia producers cut Nov oil exports, cite high duty
Sun Nov 9, 2008 11:29am EST
MOSCOW, Nov 9 (Reuters) - Russian oil firms are shipping only three quarters of their planned November exports as a government order to cut oil export duties failed to make exports profitable again, Russia’s pipeline monopoly said on Sunday.
Traders predicted in late October that Russian oil companies would cut their November exports after the government decided against lowering oil export duties. [ID:nLT520927]
On Nov. 1, the government cut oil export duties, responding to the concerns of top producers. But the cut was far less than oil companies had wanted. [ID:nL1229423]
Nikolai Tokarev, president of Russia’s pipeline monopoly Transneft TRNF_p.RTS, told Russian media on Sunday that all Russian producers had cut export volumes by a quarter since the start of November.
But he said the situation should not be overdramatised, calling the decrease in exports “a temporary phenomenon”.
“Oil companies are simply being overcautious due to high oil export duties,” Russian news agencies quoted Tokarev as saying during a visit to Cuba.
“The situation must change within the nearest week.”
Tokarev said Transneft would consider Cuba’s invitation to develop its pipeline network.
Sergei Bogdanchikov, president of Russia’s largest oil company Rosneft (ROSN.MM: Quote, Profile, Research, Stock Buzz), was quoted as saying five Russian energy majors would each hold 20 percent in a national consortium which would develop Venezuelan hydrocarbon resources jointly with Venezuela’s government.
He said the five Russian firms are Rosneft, gas export monopoly Gazprom (GAZP.MM: Quote, Profile, Research, Stock Buzz), LUKOIL (LKOH.MM: Quote, Profile, Research, Stock Buzz), TNK-BP TNBPI.RTS and Surgutneftegaz (SNGS.MM: Quote, Profile, Research, Stock Buzz). (Reporting by Dmitry Solovyov; Editing by David Holmes)
Russia Will Pursue “Independent” Strategy on Oil (Update1)
By Halia Pavliva
Nov. 8 (Bloomberg) — Russia, the world’s second-biggest oil producer, will pursue an “independent” strategy on oil production, ignoring the Organization of Petroleum Exporting Countries’ moves to cut output, said Finance Minister Alexei Kudrin.
“The government isn’t planning any restrictions of oil production in the near future,” Kudrin, who also serves as deputy prime minister, said in an interview in Sao Paulo today. “We don’t want to impose administrative barriers for restricting production. Oil businesses should estimate their own risks.”
Venezuelan President Hugo Chavez said Oct. 28 he had asked Russia to work with OPEC to reverse the slide in oil prices, which have fallen more than 50 percent in the past four months. OPEC, supplier of more than 40 percent of the world’s oil, announced production cuts during September and October and may say it plans a further reduction at a Dec. 17 meeting in Algeria, OPEC president Chakib Khelil said today.
“Of course we expect decline of oil prices” through next year as economies of the biggest oil consumers, such as the U.S. and European Union countries, may contract, Kudrin said.
Russia cut its forecast for the price of Urals, the country’s major blend of oil, to $50 a barrel in 2009 on average, from $95 a barrel previously, Kudrin said. Urals crude traded at $55.71 a barrel on Nov. 7, 61% below its high of $142.50 in July.
“We are holding consultations with the OPEC and our representatives are present at the OPEC meetings,” because Russia is interested in learning about new technologies of oil production and ways of financing the development of oil fields, Kudrin said.
Russia’s biggest oil-producing companies have private shareholders. The country’s oil and gas pipelines are controlled by the state.
“Unlike in many OPEC countries, many of our oil fields are being developed by private companies,” Kudrin said. “It’s too early” to talk about whether Russia would consider becoming an OPEC member during the next ten years, he added.
To contact the reporter on this story: Halia Pavliva in New York at hpavliva.
Nov 11, 2008
Russia to influence oil prices?
MOSCOW - RUSSIA’S Prime Minister Vladimir Putin said the country must act to influence oil prices hit by the global economic crisis, in what could signal a significant change of approach by the major crude exporter.
‘We need to work out a whole range of measures that will allow us to actively influence the market,’ he said in comments broadcast on television after a government meeting on oil production.
‘As one of the major exporters and producers of oil and petroleum products, Russia cannot stand aside from formulation of global prices for this natural resource.’
Oil prices have fallen sharply from record highs of US$147 (S$219) per barrel in July as the global financial crisis has slowed economic growth and demand.
Russia is not a member of the Organisation of Petroleum Exporting Countries (Opec) and has traditionally steered clear of working closely with the cartel to set production and pricing levels.
Vice-premier Igor Sechin said on Wednesday, however, that Russia was ready to cooperate with other oil producing countries to prop up the price of crude but was determined to stay in charge of its own production levels.
Opec last month decided to cut production by 1.5 million barrels a day in a bid to stem the fall in the price of oil.
World oil prices climbed in Asian trade on Monday after Opec refused to rule out further output cuts and China announced a massive stimulus package aimed at boosting domestic spending, dealers said.
Oil prices fell on Monday on profit-taking after earlier jumping by more than US$3, with New York’s main contract, light sweet crude for delivery in December slipping 33 US cents to US$60.71 per barrel. The contract earlier went as high as US$65.56.
Opec’s 13 countries account for around 43 per cent of world production with Russia on 12 per cent.
Mr Putin also suggested that the export tax on oil should be reviewed monthly, instead of every two months as at present. The government sharply lowered it this month to US$287 per tonne.
‘The world financial crisis, the instability on international markets and raw materials and the fall in the price of oil, demand that we adopt measures that will ensure lasting development of the sector in current conditions,’ Mr Putin said on Monday. — AFP
More on this topic (What's this?)
Oil Companies Storing Oil on Tankers, Waiting for Higher Prices (naked capitalism, 11/21/08)
Goldman Recants Its $200 a Barrel, "Super Spike" Call for Oil (naked capitalism, 11/20/08)
OPEC Left to Deliberate as Oil Prices Plummet (Money Morning, 11/23/08)
Read more on Oil Prices, Investing in Russia at Wikinvest
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