Saudi must urge Russia to join Opec: Experts

Saudi Arabia will have to take the lead in ensuring that Russia becomes a member of Organisation of Petroleum Exporting Countries (Opec), analysts and recent reports from think tanks in the sector suggest.

Russia has not only stubbornly set aside a possibility of joining the Opec, but it has also not announced an anticipated cut in its production to bolster the 2.2m (4.2m if cuts since September 2008 are considered) barrels a day Opec cut that takes effect from the first week of January 2009.
At over 9.5 million barrels of oil production everyday, Russia is the world’s largest producer of oil. However, it consumes much of its produce and thus falls behind Saudi Arabia on charts that compare oil exports. “Being the vanguard of Opec members, Saudi Arabia needs to now ensure that Russia becomes a part of Opec,” a Dubai-based analyst said.

Energy Intelligence, an information company that researches on energy said in its recent update the Saudis might not want Russia’s inclusion in the group. “Not all moderates would welcome Moscow’s arrival. Russia would become the group’s largest producer, although Saudi Arabia would remain the biggest exporter – making it the dominant power, a role that Middle Eastern producers such as Saudi Arabia want for themselves,” it said in its recent report.

Russia had earlier suggested that it would announce a cut alongside the Opec at Oran. However, it has refrained from making such an announcement suggesting that it would always keep a safe distance from the group that accounts for 78 per cent of the world’s oil reserves and 40 per cent of its produce. “Had it been serious about a closer co-operation, it would have offered a firm cooperation at Oran and it did not,” the report said.

Robin mills a Dubai-based petroleum economist said though Russia’s daily production is declining, it has nothing to do with a co-operation with Opec. “Russia had suggested it would cut around 300,000 bbl/day. However, it remains to be seen if, how and when this is implemented. Russia’s production is currently in slow decline anyway, so just waiting will deliver a cut,” he said.

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