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You’re no longer effective, Russia tells OPEC

Russia has said OPEC is effectively extinct as a united organisation and the time when it could determine global oil market conditions should be forgotten.

The statement was made by Igor Sechin, head of Russia’s biggest oil firm Rosneft.
The comment is the first from Russia’s most influential oil executive after crude producers failed to agree to freeze output to support prices at a meeting in Qatar last month.
A long-standing ally of President Vladimir Putin, Sechin, has been sceptical about OPEC before, saying that top oil producer Russia should stick to its own strategy and protect its market share.
“The 1970s, when a series of the largest Middle East producers could determine global oil market conditions by creating cartel structures such as OPEC, should be forgotten,” Sechin told Reuters.
“At the moment a number of objective factors exclude the possibility for any cartels to dictate their will to the market. … As for OPEC, it has
practically stopped existing as a united organisation.”
A deal to freeze oil output by OPEC and non-OPEC producers fell apart at a meeting in Doha last month after Saudi Arabia refused to commit without Iran joining in.
Saudi Arabia, the world’s largest oil exporter, is the key decision maker in OPEC and a fierce rival of fellow OPEC member Iran.
Russia is not a member of OPEC.
Sechin, 55, helped Putin consolidate a third of the
Russian oil industry under Rosneft’s control following chaotic privatisations in the 1990s.
He has previously said that OPEC has “lost its teeth” and has said Moscow would never cooperate with OPEC because Russia’s oil industry could withstand any price rout thanks to cheap labour and a weak local currency.
“Sechin has long been totally against the idea (of cooperating with OPEC). He believes that as a superpower, Russia should not be making this type of alliance,” said a Russia’s biggest oil firm Rosneft from outside Russia who has been involved in meetings between OPEC and Russia in recent years.
With the Doha failed meeting, Sechin’s stock is likely to
have risen in Putin’s eyes.
“The company was sceptical from the very beginning about the possibility of reaching any sort of joint agreement with OPEC’s involvement in current conditions,” Sechin said.
“Just to remind you, the only question with which we responded to those interested in knowing our position was: ‘Who should we agree with and how?’ The development of the situation has clearly shown we were right.”

 

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