There were those strong hints of a “major announcement” from Opec president Chakib Khelil last week, but could this be what he was alluding to?
Russia to Work With OPEC to Stabilize Oil Prices, Medvedev Says
Pronina Nov. 27 (Bloomberg) — Russia will coordinate with members of the Organization of Petroleum Exporting Countries including Venezuela to keep oil prices from falling “too low or speculatively high,” President Dmitry Medvedev said. Major price swings aren’t in the interest of either oil- producing or consuming countries, Medvedev said yesterday in a Caracas ceremony where he and Venezuela President Hugo Chavez signed energy accords. He said Russia would “coordinate fundamentally with Venezuela” and other OPEC nations, without specifying how. “We will be coordinating, but it doesn’t mean that we’ll be colluding, Medvedev said. Stable oil prices “are important for us and important for our economy, just as they are for the economy of Venezeula and other countries.”
Russia is the world’s second-biggest oil producer after Saudi Arabia and isn’t a member of OPEC, a cartel that produces about 40 percent of the world’s oil. Deputy Prime Minister Igor Sechin said Russia prepared a memorandum of understanding with OPEC that will let them share data and work together on oil forecasting. OPEC will consider the memo at an upcoming meeting, he told reporters after the ceremony.
Lets not get too excited, this is not an outright declaration that Russia is joining Opec. But it is an important gesture, a gesture that means if it could, it would.
At the moment, Russian infrastructure prevents it from becoming a fully functioning member as its wells are mainly situated in sub-zero zones. Turning off pumps is not so easy as well-heads would freeze over. It is this, above all, which keeps Russia from physically being able to “swing” produce, a must for any Opec member.
That’s not to say it can’t become a swing producer. Deputy Prime Minster Igor Sechin, has already said Russia is studying the development of a major reserve to overcome the problem. Being easier to manage from a flow perspective, a reserve would finally give Russia some degree of swing capability.
Related links:
The Opec defence - FT Alphaville
Opec, it’s all about compliance - FT Alphaville
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