Russia vows to cut global oil price by stepping up production
ByLine: Fred Weir in Moscow
It may seem an unlikely saviour, but Russia is pledging to rescue the world from soaring energy prices by ramping up
its oil exports to calm worried markets.
"If oil prices remain high we will boost production and exports," Russian Finance Minister Alexei Kudrin
said.
He said output would grow immediately by 500,000 barrels per day, with an additional two million bpd coming onstream
by 2006.
"If prices come down again we will not create artificial obstacles for world economic growth by cutting
exports," he said.
But some experts warn the Kremlin's offer could be an empty public relations ploy, because a decade of
mismanagement has rendered Russia's dilapidated, oligarch-owned oilfields incapable of significant long-term
expansion.
US Energy Secretary Spencer Abraham visited Moscow last week to plead with President Vladimir Putin for urgent
Russian production increases and hastened construction of a new pipeline to the Arctic port of Murmansk to facilitate
deliveries of Russian crude to North America.
"Of course Putin is pleased to see the west coming to him for help, and it accords very well with his
plans," said Konstantin Simonov, director of the independent Centre for Political Trends in Moscow. "It's
a way to develop Russia's economy, as well as reap political dividends abroad."
Oil prices have soared beyond $40 per barrel in recent weeks. Russian experts believe prices will remain high due to
demand in China.
Russia is not a member of the 11-member, Saudi-dominated Organisation of Petroleum Exporting Countries, which decided
at a Beirut meeting on Thursday to boost its own output to ease prices.
"The best oilfields are exhausted, and companies have not been putting enough resources into exploring new
ones," said Yury Nogotkov, spokesman for the Russian Ministry of Energy and Industry.
A meeting of oil experts in Moscow last week concluded that Russia's output could begin to dive by 2006, due to
frazzled infrastructure, tapped-out oilfields and bad pumping practices.
In his national address last week, Mr Putin called for a crash programme of pipeline construction and oilfield
renewal. He has also moved decisively against the oligarchs, which some experts think could foreshadow a state takeover
of the oil industry.
"Putin is determined to bring the oil industry under control; it's the goose that lays golden eggs for
Russia," says Sergei Kazyonnov, an expert with the independent Institute of National Security and Strategic
Research in Moscow.
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