Sector News

Russia plans no joint action with OPEC: sources

January 28, 2016

(Reuters) – Russia’s government is not discussing cooperation with OPEC, two senior Russian officials told Reuters, after a co-owner of the country’s No. 2 oil producer Lukoil said Moscow and the exporter group should join forces to battle low oil prices.

The comments from Lukoil co-owner Leonid Fedun contradicted a long-standing stance by Russian officials that if Russia bowed to any OPEC request to cut production jointly, the country would lose market share.

The two senior officials, who are familiar with the matter, said Fedun’s comments were his personal opinion, not agreed to or supported by Energy Minister Alexander Novak or others in the industry.

“There are not any measures on possibly cutting production being discussed now. Neither Fedun, nor Lukoil offered anyone anything,” one of the sources said.

Another official, who spoke on condition of anonymity because of the sensitivity of the matter, also said Fedun was voicing his own opinion. “It is impossible to coordinate the process and stop production in Russia,” the second source said.


Oil prices have fallen close to $31 per barrel from around $115 in the middle of 2014, causing problems for Russia’s cash-strapped budget and pushing the Russian economy into recession.

Some members of the Organization of the Petroleum Exporting Countries want coordinated output cuts to push up the price.

Yet oil production in Russia reached a new post-Soviet high in December of 10.80 million barrels per day, as a weak rouble helped Russian oil firms to offset falls in the price of crude.

A manager at a top-four Russian energy firm said coordinated cuts would not be welcomed by an industry that was fighting the possibility of declining production because of a rising tax burden and ageing fields.

“Russia has too much risk of seeing a natural decline anyway, without any agreed special steps,” the manager said, playing down the possibility of agreed action.

Another oil company source said: “We’ve heard nothing of any specific actions.”

The Russian Energy Ministry declined to comment, as did Rosneft, Russia’s top oil producer. Gazprom Neft and Surgutneftegaz did not reply to Reuters requests for comment.

A spokeswoman for Deputy Prime Minister Arkady Dvorkovich, in charge of the energy sector, declined to comment.

Russia holds regular discussions with various countries, including oil-producing ones, on the situation on oil markets but there are no plans as of now for coordinated actions, the Kremlin’s spokesman said on Wednesday.

(Additional reporting and writing by Katya Golubkova; Editing by Christian Lowe and Dale Hudson)

By Denis Pinchuk and Margarita Papchenkova

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