Control of Oil Price: Is OPEC Unnecessary for Russia?

Azerbaijan, Baku, 26 September / Trend corr. A.Badalova / The Organization of Petroleum Exporting Countries (OPEC) expressed its intention to see Russia as one of its members, Shakib Khalil, the OPEC President and the Algerian Minister of Energy, said.

Earlier, Russia offered to unite its efforts with the OPEC to stabilize prices at the world oil market. Russia is expected to sign a cooperation memorandum with the OPEC in October, Sergey Shmatko, the Russian Minister of Energy said. Russia is going more actively to influence on formation of oil prices. The Ministry of Energy develops a relevant proposal, which will be publicized at the OPEC next session. Russia did not send an official request to join the cartel.

Analysts, questioned by Trend on 25 September, doubt about prospects of Russiaїs joining the OPEC and do not expect considerable changes at the world oil market.

Russiaїs possible joining the OPEC cannot considerably change anything, Carlo Stagnaro, the director of the Energy Department of the Italian Bruno Leoni Institute, said.

On the other hand, so far, the OPEC has had problems on resistance to the foreign forces, as well as faced with difficulties inside the cartel on setting quota, Stagnaro told Trend on 25 September.

According to the Italian analyst, the OPECїs last meeting in Vienna clearly testified for it. At the beginning of September the OPEC made a decision to reduce volumes of oil production by 520,000 barrels a day to 28.8mln barrels a day at the meeting.

їOn the other hand, it is critically important for Russia to maintain oil production at a stable level, but not to solve issues to reduce it or not,ї he said.

Russiaїs joining the cartel will be of political character, Stagnaro said. їHowever, its joining will not be so important in practice,ї he said.

The coordinated actions and operations are possible on Russiaїs joining the OPEC, Shirvani Abdullayev, the senior analyst for oil and gas of the Russian Alfa-Bank, told Trend over telephone from Moscow.

їGenerally, I treat Russiaїs joining the OPEC critically,ї the analyst said. Here the main issue is a control of oil price, Abdullayev said.

The issue is the state of the financing system in several years and the result of the financing crisis in the United States, he said. Both Russia and the OPEC worry about potential collapse of the oil market in case of serious slowdown of economy in the world, Abdullayev said.

їMedium-term price of oil will be specified depending on the way the United States survives financial crisis,ї he said.

The OPEC, which possesses 42% of the world oil production, unites Algeria, Angola, Venezuela, Indonesia, Iran, Iraq, Qatar, Kuwait, Libya, Nigeria, the United Arab Emirates, Saudi Arabia and Ecuador.

Specific weight of the Russian oil reserves comprised 8% of the estimated OPEC crude reserves in 2007. Specific weight of the Russian oil production was 2.8% of the OPECїs lump production in 2007.

According to BPїs report on State of world energy 2008, the estimated reserves of the OPEC countries amounted to 934.7bln barrels of oil on 1 January in 2008. The estimated oil reserves of Russia make up 79.4bln barrels, due the data of BP co.

Oil production of the OPEC countries amounted to 35.2bln barrels a day in 2007. The Russian oil production made up 9.9mln barrels of oil in the same year.

The correspondent can be contacted at - с[email protected]