Russia should consider cutting oil production to help OPEC prop up prices, an executive of Lukoil, Russia's biggest private oil company, said Wednesday.
Lukoil vice president Leonid Fedun also suggested that Russia could find it beneficial to join the oil cartel in the future. This would be a sharp change of direction for Russia, which has kept its distance from OPEC and insisted on its right to act independently in setting setting production targets.
"The future of the Russian oil industry and stable oil prices hinge on a closer cooperation with OPEC," Fedun said at an investment conference in Moscow. "This may even mean OPEC membership at some stage."
He added that executives from Russia's top oil companies could attend the OPEC meeting in Algeria in December.
Fedun said it would be reasonable to join OPEC in production cuts as Russian production is slowing anyway.
An Energy Ministry official acknowledged last week that Russia is heading for its first production decline in 10 years, saying output is likely to fall 0.3 percent, or 1 million metric tons. Analysts expect a bigger drop, of up to 3 percent this year.
Analysts say Russia is unlikely to agree to coordinated production cuts because production at West Siberian oil wells is difficult to halt because of low temperatures and geological factors.
Fedun said the government would be better off paying the oil companies for shutting wells than putting up with low crude prices.
"The Russian government is the ultimate beneficiary from high prices after all," he said.
Lukoil's vice president predicted oil prices would soar above $80 per barrel if Russia decided to join OPEC's possible 1.5 million barrel cut. Slashing 300,000 to 400,00 barrels per day would be quite affordable and feasible, he said.
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