OPEC lobbies for crude export drop

The OPEC oil cartel said on June 18 it hoped to convince key rival Russia to continue to cooperate in limiting crude production at a meeting later this week but was realistic about its chances.

The 11-member cartel would like Moscow to extend a self-imposed ceiling on exports, which helped to revive crude prices in the fourth quarter after last year's post September 11 sharp slump.

OPEC, which produces over 30 percent of the world's crude, believes world oil prices remain fragile and is scared that a new increase in global oil supply would send prices back through the floor.

Experts from OPEC and Russia are to meet at the cartel's Vienna headquarters later this week, ahead of a full ministerial meeting on June 26 in the Austrian capital.

But OPEC officials have few illusions about the intentions of Russia, the world's second biggest oil exporter with some 3 million barrels per day sold outside the country.

Moscow decided in mid-May progressively to ease the restrictions on its exports. And this despite the fact that outgoing OPEC Secretary General Ali Rodriguez recently stressed to non-OPEC producers that it was "imperative" that they maintain their output ceilings.

"The decision was taken and announced in May and will remain the same for the next quarter," said Stanislav Naoumov, spokesman for Russia's deputy prime minister in charge of the energy industry, Viktor Khristenko.

"I don't think that Russia will change it's mind during the session. But we think we can get them on board again in the long run. It's in their interest," said a source at the Arab-dominated cartel.

Last December, under pressure from OPEC which was trying to revive prices from $17 per barrel, Russia agreed to reduce its exports by 150,000 bpd in the first and second quarters.

With prices now back around $25 a barrel, Moscow says it can resume exporting at full capacity. Finance Minister Alexei Kudrin recently said that no restrictions would be imposed as long as oil prices remained above $20 a barrel.

Moscow's strategy seems to be to resurrect Russia's oil output to the record levels of the late 1980s, to take back its market share lost to rival producers, notably OPEC.

In this context President Vladimir Putin launched a new dialogue on energy with the United States during the recent visit to Moscow by U.S. President George W. Bush.

That cooperation is designed to make the United States less dependent on oil from the volatile Middle East, while at the same time bringing much-needed investment to the Russian economy.

"This new honeymoon between Washington and Moscow will be an important topic during the next ministerial meeting. It could lead OPEC to put more oil on the market in the fourth quarter," said an OPEC source.

OPEC's hopes of cooperation from key rivals were also hit on June 18 when Norway, the third-largest oil exporting nation after Saudi Arabia and Russia, again hinted that it is preparing to lift its own output from July.