October 5th 2015
Russia is ready to meet with members of the Organization of Petroleum-Exporting Countries (OPEC) -- as well as non-member oil producers -- to discuss the situation facing global oil markets, according to the country’s oil minister.
Alluding to a possible meeting with the 12-member oil producer group OPEC, Energy Minister Alexander Novak said Saturday “if such consultations are to happen, we are ready to take part,” Reuters reported, although he did not say when and if such a meeting may take place.
In addition, he told reporters that a meeting between officials from Russia and Saudi Arabia was being planned for the end of the month to discuss energy issues and other projects.
Following the report, oil prices rose on Monday. Benchmark Brent crude was trading 70 cents higher at $48.72 a barrel Monday morning after ending up 44 cents on Friday. U.S. crude was 57 cents higher at $46.11 a barrel after settling up 80 cents.
Asked whether any meeting between Russia and OPEC could occur in the forthcoming months, the organization would not make any official comment, but the Russian and Saudi Arabian energy ministries were preparing remarks for CNBC.
The comments seem to contradict one of Novak’s energy ministry colleagues, however, who said on Friday that he was not aware of any such meetings and that Russia would stick with its plans not to cooperate with OPEC.
Russia’s economy has not only been hit hard with the fall in oil price. International sanctions imposed on the country for its annexation of Crimea and role in the pro-Russian uprising in Ukraine have also seen it isolated from the world stage in terms of exports.
Major oil producers such as Russia and OPEC, which includes Middle Eastern producers as well as Venezuela, Mexico and Nigeria among others, have been hit hard after a sharp drop in oil prices since June 2014 (when a barrel of Brent fetched $114) on the back of a glut in supply and lack of demand.
Rather than cutting production in a bid to support prices, however, OPEC decided last November to maintain its production ceiling of 30 million barrels a day. The move has been seen largely as a strategy to defend its market share amid a rise in U.S. shale oil production.
This is not the first meeting between the two: Russia and the group met in May to discuss the dramatic drop in global oil prices.
At that meeting, Russia refused to cut its own production in a bid to support prices -- somewhat understandably given that OPEC itself has maintained record production levels. A follow-up meeting was proposed, however, and any forthcoming discussions could signal that OPEC is ready to discuss a change in strategy or closer cooperation with Russia – a country seen as a possible addition to the powerful, so-called “cartel.”
Against a backdrop of lower revenues from the country’s oil industry, the Russian Finance Ministry has proposed changes to oil taxation in a bid to raise revenues from exporters (who have nonetheless benefitted from the weak ruble which has made Russia’s oil exports attractive).
The plan would raise an additional 1.6 trillion rubles ($24.1 billion) in revenues in 2016-18, the RIA Novosti news agency reported. The Energy Ministry is opposed to the proposal.