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Russia hopes for OPEC deal, companies resistant
By Ivan Rodin and Mikhail Yenukov
MOSCOW, Nov 15 (Reuters) - Russia's finance minister said on Thursday he hoped for a deal with oil cartel OPEC, applying pressure on Moscow to back crude output cuts and support prices, but leading domestic producers were hesitant.
Saudi Oil Minister Ali al-Naimi kept up OPEC's push to force Russia to fall in line with production cuts, saying the country was being unreasonable and that it, along with his nation, would be the biggest losers if crude prices fell further.
Russian officials have so far shown little sign of moving fast to please the cartel. It has proposed a tiny production cut of 30,000 barrrels per day, derided by al-Naimi as miniscule.
But Finance Minister Alexei Kudrin saw hopes for agreement.
"I want to say that this OPEC demand should be taken as a continuation of efforts to work out an acceptable solution. I would like to note that working out this solution has turned out to be more difficult than expected," he told reporters.
"But I think it will be found anyway," he said.
OPEC's meeting in Vienna on Wednesday ended with a decision to cut output by 1.5 million barrels a day from January 1, but only if non-OPEC states, with Russia in the lead as the world's second largest exporter, cut by a combined 500,000 bpd.
Russian Deputy Prime Minister Viktor Khristenko, who coordinates the government's work with the country's mostly privately-owned oil companies, saw more talks with OPEC.
"We have not excluded and have never broken off the system of consultations with OPEC member states about a stable oil market," Khristenko told reporters in Azeri capital Baku.
OIL COMPANIES RESIST
Russia's proposed cut of 30,000 bpd is a small drop in the ocean of its daily output of seven million bpd. It has also so far not touched on the issue of cuts to its daily exports of three million bpd.
Russia can only apply indirect pressure on exports and output as most oil companies are privately owned.
The companies themselves have seen little need to make deeper cuts and the head of Russia's second largest producer, YUKOS, indicated any cooperation would be unwilling.
"If they (the government) tell us to reduce output, we will reduce, but I will do everything in my power to prove that this is unreasonable," Mikhail Khodorkovsky told a news conference.
He said output cuts by Russian oil companies, some of the key locomotives of the economy, would have a wider domestic impact by reducing those firms' investment programmes.
"The losses of Russian industry from a fall in orders from oil companies will be about $6.0 billion," he said.
Russia has in the past agreed to help OPEC support prices, which have sagged after the September 11 U.S. attacks and amid slowing demand, but has rarely taken any practical steps.
Instead, it has continued to pump oil and taken in as much foreign currency revenue as it can as it seeks to service its huge foreign debt burden of $140 billion. The need for cash is all the more intense as repayments are set to rise to a peak of $19 billion in 2003 from $14 billion this year and next.
The head of Russia's top oil company, LUKOIL, said he saw crude prices going up again. "I think that in the end oil prices will be slightly lower than $27 a barrel," LUKOIL head Vagit Alekperov told the Nezavisimaya Gazeta daily.
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