Russia to go with OPEC in cutting oil production

New Delhi, Nov 25 (UNI) Russian Energy Minister Sergey Shmatko today said his country will go with Organisation of Petroleum Exporting Countries (OPEC), if it decides to cut oil production to protect its interests, due to falling margins in view of the tumbling oil prices.

''Russia will cooperate with OPEC to defend its interest.

We would like to understand the process involved. Russia would coordinate with OPEC,'' Mr Shmatko said while addressing the ''India-CIS Roundtable on Hydrocarbons'' here.

The international crude oil prices have fallen from 147 dollars per barrel in July to about 50 dollars a barrel at present.

The OPEC, which is scheduled to meet on November 29 at Cairo, is proposing to cut production by a further one million barrels a day.

The oil cartel had earlier announced production cut of 1.5 million barrels a day.

''In OPEC, they are actively discussing measures to protect current market of oil and reduce production,'' he said.

The Minister expressed concern over the falling crude oil prices, saying this was dangerous for both producers and consumers.

''The prices (of oil) should justify the hefty investments made by oil firms in exploration and production (E&P) and marketing and distribution,'' he said.

He said low crude oil prices are hurting oil producers who have budgeted their investment at 70-90 dollars a barrel.

Mr Shmatko attributed the fall in crude oil prices to global recession in major economies and irresponsible speculation in the oil market.

He said Russia is planning to form an Organisation of Gas Exporting Countries with Iran and Qatar to control prices of environmental friendly fuel. However, he did not give any details like the timeframe and policies the oil cartel will pursue.

The Minister said the year 2009 is going to be difficult for oil markets in view of the pessimistic outlook and recessionary trends in oil markets.

''How long this situation will last is difficult to say,'' he said.

The Minister said the world will see a significant fall in oil prices in the coming years, and urged that countries should sit together and have intensive dialogues to tide over the current crisis.

He said high and low prices of crude oil are relative, and added that some sort of stability was necessary in oil market.

Talking about the bilateral relations with India, especially in the oil and gas sector, Mr Shmatko said it has been decided to form a joint working group at the ministerial level to give a boost to the oil and gas sector.

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