Russia Pledges to Limit Oil Export for Second Quarter
By Vladimir Todres
Moscow, March 20 (Bloomberg) -- Russia said it will limit oil exports for a second quarter to help OPEC increase world prices. The No. 2 oil producer probably won't force its companies to abide by the promise, analysts said.
Prime Minister Mikhail Kasyanov and Russia's biggest oil companies agreed to cut oil exports by 150,000 barrels a day from October's peak. The export restrictions may be reviewed if there is ``genuine stability on the market,'' Kasyanov said.
Russia and other producers last year promised to remove almost 2 million barrels a day from world markets, helping boost global oil prices 26 percent this year. Russia's initial commitment was for the first quarter, and oil companies may evade the renewed limits after oversupply on the domestic market caused prices to plunge, analysts said.
``What they say and what they do are two separate things entirely,'' said David Thomas, an oil analyst at Commerzbank Securities in London. ``Better demand, better OPEC compliance and falling inventories in the U.S. boosted prices. Russia was largely irrelevant.''
Brent crude for May settlement fell 0.6 percent to $24.76 a barrel on the International Petroleum Exchange in London.
``Current oil prices are at a satisfactory level,'' Kasyanov said. ``We aren't interested in further price fluctuations, either up or down. If we see genuine stability on the market and maybe an upward trend in the price, we will review our decision for the rest of the quarter.''
A spokesman for Saudi Arabia's oil ministry declined to comment. Officials from Kuwait and Qatar were unavailable for comment.
Urals Blend
Russia's Urals crude blend has averaged $19.41 a barrel in London so far this year. Domestic prices have hovered around $5 a barrel. The country pumped 8.5 percent more crude in January than a year earlier.
The country's six largest oil producers are owned by investors. While the government can limit exports through the state-controlled pipeline network, companies such as AO Yukos Oil Co. and OAO Sibneft can increase shipments abroad by rail.
Russian producers have also compensated for crude export limits by shipping more oil to Ukraine and Belarus, where it is refined and then sent to the West, said Leonid Mirzoyan, an analyst at Deutsche Bank AG.
Yukos and Sibneft, the country's second and sixth-biggest companies, have led opposition to export restraints, promising to lift output this year by as much as 20 and 27 percent, respectively.
``What matters is what Russia says, since that avoids a clash with OPEC and a price war,'' said Stephen O'Sullivan, head of research at Moscow brokerage United Financial Group. ``The problem of what the country actually does will only become an issue later in the quarter.''
January Exports
Exports totaled 2.6 million barrels a day in January and 2.66 million in February, down from 2.97 million barrels in October, according to Russia's State Statistics Committee. Both months' shipments were higher than December's.
Last week the government tentatively set second-quarter crude oil exports outside the former Soviet Union at 2.42 million barrels a day. The amount may be increased before the end of the month, it said.
Idle export capacity may push the government to increase pipeline quotas, said Ivan Mazalov, an analyst at Commerzbank AG in London.
``There have been curbs on exports while a newly built pipeline and terminal near St. Petersburg stood idle,'' he said. ``That's unlikely to last.''
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