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Russia ready for deeper oil output cut
By Samantha Shields and Mikhail Yenukov
MOSCOW, Nov 22 (Reuters) - Deputy Prime Minister Viktor Khristenko said on Thursday that Russia was ready to take further steps to help OPEC support oil prices and companies said they would meet the government on the issue on Friday.
Leading Russian oil firms LUKOIL and Tyumen Oil said they backed further reductions in exports and production which OPEC has demanded. Second-largest producer YUKOS also thought a compromise would be found.
"We understand that measures taken to stabilise the energy resources market, including any extra measures, can only be joint and responsible measures, that is to say, which must be fulfilled," said Deputy Prime Minister Viktor Khristenko, who co-ordinates the government's work with oil firms.
"We are ready for this and these efforts should lead to a stable and fair level of prices for oil beginning from the new year," he was quoted by Russian news agencies as saying. He added that Russia's view of a fair price was $20-$25 a barrel.
OPEC has said it will cut of 1.5 million barrels per day, if Russia and other non-members of the cartel make a reduction of 500,000 bpd. Moscow has so far offered only 30,000 bpd.
Oil exports are vital to Russia's economy. Around 20 percent of budget revenues comes from taxes on crude exports. Investor perception is also linked to oil, although Russian shares and bonds have so far performed well.
Russia's oil industry is largely controlled by private companies and the head of the largest, LUKOIL, said he and other industry executives will meet the government on Friday to discuss the country's response to OPEC.
"Tomorrow there will be another one of our meetings with the government and if a decision is taken to reduce output or exports, we will carry it out," Vagit Alekperov told reporters on the sidelines of an industry conference.
Tyumen Oil Company (TNK) said a cut in Russian exports of 100,000-150,000 bpd was possible.
"These are realistic figures which will allow everyone to save face. A total of 30,000 is not realistic," said TNK President Simon Kukes, whose firm is number three oil producer.
"So far, the figure of 100,000-150,000 is only on paper," he added, saying he could not give a figure for how much each individual company would reduce exports. "It would be proportional, but we need to discuss it."
RUSSIA EYES WEAKER PRICE
Russia's output is currently seven million bpd while exports are at three million bpd. Of non-OPEC members, Mexico has offered sizeable output cuts while the head of Norway state oil firm Petoro said Oslo was likely to cut output by 100,000-200,000 bpd.
Mikhail Khodorkovsky, the head of Russia's second-largest oil company YUKOS said he believed a decision to suit both OPEC and independent producers could be found.
Worries over the weakening oil price have already forced Russia to revise downwards its economic forecasts for next year.
Economists have said Russia, with foreign debts of $140 billion, could manage with an oil price of $12 a barrel, but others hope for a compromise between Moscow and OPEC.
"We welcome the fact that the government looks to have a game plan to get through the low oil price environment in the next two years," said finance house United Financial Group.
"Nevertheless, the best outcome, and our base case, would be OPEC preferring to avoid a major fight," it said.
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