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Monday, 4 March, 2002, 18:22 GMT
Russia defies Opec pressure
oil rig
Russia is the second largest oil producer in the world
Russia has delayed a decision on whether to keep a pledge, made to the Organisation of the Petroleum Exporting Countries (Opec), to stick to its current oil output levels until June.

After a meeting with Opec officials, Russian prime minister Mikhail Kasyanov said his country was not ready to respond to Opec's demand for a continued squeeze on Russia's oil exports into the second quarter of the year.

He had been meeting in Moscow with Opec Secretary General Ali Rodriguez and president Rilwanu Lukman, who had hoped to extract a commitment from Russia to not to increase its oil output.

But the Russian prime minister promised only "continuing cooperation" with the cartel.

Fighting for the market

But government officials have said Opec's request would lead to Russia losing market share.

The Russian president's economic advisor Andrei Illarionov said limiting oil exports would "not meet the interests of the national economy".

While the talks continued, Mr Illarionov told a news conference that continuing the cuts requested by Opec could slow Russia's economic growth.

High oil prices have fuelled Russia's growth during the past three years.

Russian oil companies have invested heavily in production and started to increase output significantly in the second part of 2001.

With the economy slowing, the government has fears that following Opec's strategy of slashing output to bolster prices high would mean losing its market to Caspian countries, notably Kazakhstan and Azerbaijan.

Painless cut

Russia's pledge to curb oil production in the first quarter of 2002 by 150,00 barrels per day was instrumental in averting a price war threatened by Opec, and in securing production cuts from cartel members themselves.

Opec and Russia accused each other of cheating over production figures, but none of the allegations was accepted or confirmed.

That initial Russian cut was seen as largely painless, since oil production and exports tend to fall in the winter anyway.

But extending the restrictions, as Opec wants, would be more delicate, analysts say.

Opec is due to discuss its policy at the cartel's meeting in Vienna on 15 March.

See also:

11 Feb 02 | Business
Russia hints at oil production rise
18 Jan 02 | Business
Opec's grip on oil market weakens
28 Dec 01 | Business
Opec cuts exports to boost prices
05 Dec 01 | Business
Russia cut prompts oil price surge
04 Dec 01 | Europe
Russia on Opec collision course
15 Nov 01 | Business
Russia defies Opec oil cartel
26 Nov 01 | Media reports
Press questions Russia's oil policy
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