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Russia proposes closer ties with OPEC


Agence France-Presse
First Posted 09:03:00 09/10/2008

Filed Under: Economy, Business & Finance

VIENNA, Austria -- Russian Vice Premier Igor Sechin reached out to the Organization of Petroleum Exporting Countries (OPEC) late Tuesday, calling for greater cooperation between the cartel and his country, the world's second biggest oil producer.

Sechin, who is chairman of Russia's biggest Russian oil group Rosneft, said a "draft memorandum of understanding" had been submitted to OPEC on closer cooperation between Russia and the group.

"Cooperation with OPEC is one of the priorities of Russia," he said, according to a statement read out at the opening of a meeting of OPEC's 13 members here.

He underscored that OPEC powerhouse Saudi Arabia and Russia were the largest oil producers in the world -- they are number one and two measured by output -- and referred to the "ambitious potential" of cooperation with the cartel.

The timing of the visit to OPEC by such a senior Russian official is likely to raise eyebrows in consumer nations as relations between Moscow and the West deteriorate in the aftermath of the Russia-Georgia conflict in August.

Any closer cooperation would vastly increase the market power of OPEC, which already pumps 40 percent of world oil, and would cause worries about the collective influence of the world's dominant oil producers.

British Prime Minister Gordon Brown warned at the end of August that the West would not be held ransom by hydrocarbon-rich Russia and urged Europe to find alternative sources of power to avoid "an energy stranglehold."

Independent analyst John Hall, who runs an energy consultancy in London, said the move by Russia could be seen as part of a strategy by Moscow to find political allies after its military action in Georgia.

"Russia is under pressure at from the United States and European Union and is looking for allies around the world and it would strengthen its position to have an alignment with OPEC," he told AFP.

Russia already has close ties with fellow OPEC members Iran and Venezuela, which are also at odds with the United States. It has also lent support to the idea of a "gas OPEC," causing alarm in the European Union.

Russia and Venezuela agreed to coordinate energy policies in July at a meeting between Russian President Dmitry Medvedev and Venezuelan counterpart Hugo Chavez in Moscow.

Sechin said part of the cooperation with OPEC would include providing for a "stable pricing environment" for producers and consumers.

An unnamed Russian official quoted by Dow Jones Newswires said the memorandum of understanding would be "a broad framework" for contacts between OPEC and Russia, "reviving" an agreement that existed until 2005.

He said it could take two months to sign, suggesting it could be finalized in October when OPEC representatives come to an international oil conference in Russia.

The official said the proposal came because of "a new team" at the Kremlin, citing the arrival of Sechin as vice premier.

David Kirsch, head of the market intelligence service at US-based energy consultancy PFC Energy, said Sechin's appearance was highly significant.

"Sending Sechin here sends a strong signal about cooperation between OPEC and Russia," he said. "The statement is clear that Russia has its legitimate interests and will pursue them in energy markets." (Dow Jones Newswires contributed to this story)



Copyright 2012 Agence France-Presse. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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