Russia wants to assert control over the price of oil by co-operating closely with Opec, feeding speculation that the world's largest producer may join the exporters' group. Russia has collaborated with Opec in reducing oil exports when prices fell in the past, but expectations of an even closer alliance have risen since the attendance of the deputy prime minister at Opec's ministerial conference earlier this month.
"There has to be a Russian factor" in determining prices "and maybe not just one", Sergei Shmatko, the energy minister, told reporters in Russia's remote Kamchatka region. Mr Shmatko said Russia would build spare oil-production capacity to be able to regulate output quickly, and said the government would present its work to Opec members at the group's next meeting in December. Russia's oil industry is dominated by the private sector and normally produces at full capacity unless prices fall below cost.
The energy minister's statement fed fears in major consuming nations that Russia might join Opec, giving the group control of 55 per cent of the world's supply of liquid fuels, up from 43 per cent today, according to figures assembled by the International Energy Agency. Opec does not directly control oil prices, but regulates output to balance supply and demand. The group agreed to trim exports at this month's meeting, prompting fears that prices would stay above $100 a barrel.
Whispers about Russia's intentions grew louder earlier this month, when the government sent Igor Sechin, the deputy premier, to the Opec meeting in Vienna. Mr Sechin's presence was the country's highest-level representation to Opec in a decade and comes at a time of increased assertiveness in Russian foreign policy. In an address to ministers and the press, Mr Sechin said co-operation with Opec was "one of the most important priorities of Russia".
On Wednesday, Chakib Khelil, the Opec president, said the group had not received a request for membership from the Russian government, but would welcome the country into its ranks. However, Andrew Neff, a Russian oil analyst at Global Insight, said he thought full-fledged membership for the country was unlikely. "I still can't see Russia joining Opec - both sides' long-term interests are just too divergent," he said. "Russia would be constraining its own policies by joining a club where it's not the leader."
Russia would never be able to compete with Saudi Arabia to be the swing producer of the group because it lacked spare capacity and the ability to limit production at a moment's notice, he said. In the short-term, however, talk of greater co-operation was to the advantage of each side because it stoked fears on markets of a future decline in oil supply, keeping prices up. "Even talking about it has a useful purpose," Mr Neff said, calling the suggestion of co-operation a "shock wave" that would have a significant psychological impact on markets.
Since the collapse of the Soviet Union, Russia's production strategy has mostly hinged on increasing output as quickly as possible to improve its market share, except for a brief blip in 1999 when the country cut output in solidarity with Opec to reverse a slump that had seen oil prices drop to $9 a barrel. Russia's production growth is now stagnating, however, meaning that a fall in oil prices would impact its oil revenues, Mr Neff said.
"Russia has no recourse to stem the fall in revenue but to make sure that prices don't collapse," he said. The Russian economy has boomed largely on the cushion of high oil revenues, but has now become dependent on the extra cash. "The problem is the eight years of petro-fuelled economic growth: in some respects, it has got addicted to the petrol revenues," he said. Opec ministers said they would reduce exports by about 500,000 barrels per day (bpd) to rebalance global oil markets that they said had slipped into oversupply.
Petrologistics, a Geneva-based firm that tracks tanker shipments, predicted Opec's supply would fall by 800,000 bpd this month on the back of lower exports from Saudi Arabia, Iran, Iraq and Nigeria. Mr Gerber said the reduction was a "correction" from unusually high output last month and did not reflect the results of the group's agreed cut. * with Bloomberg firstname.lastname@example.org