Russia Officially Drops OPEC Quota Deal

Russia officially announced yesterday that it would abandon a deal with OPEC to curb crude supplies, saying that oil exports would rise by one hundred and fifty thousand barrels per day (bpd) in the third quarter of the year.

The world's second largest oil exporter effectively ditched the pact several months ago and is already pumping at almost full capacity.

However, Russian Deputy Prime Minister Viktor Khristenko told reporters the country had some extra capacity to boost exports still further.

”The volume of Russia's exports to non CIS destinations in the third quarter will grow against the second quarter by about two million tonnes or 150,000 barrels per day (bpd),” he said after a meeting of a commission on access to oil pipelines which he heads.

He said the rise would mainly be due to the Russian port of Primorsk on the Gulf of Finland, which was built in December 2001 and has now reached its maximum 250,000 bpd capacity.

Khristenko did not give total third quarter export figures but said his commission had approved the energy ministry proposals. An energy ministry source said last week that third quarter exports would reach 33.2 million tonnes through the state pipeline monopoly Transneft.

In addition to Russian exports, Transneft will carry four million tonnes of crude from neighbouring Kazakhstan and Azerbaijan in the third quarter, while another 4.7 million tonnes will bypass its pipelines, the ministry source said.

Russia, where oil output is booming for the fourth consecutive year, agreed to curb its January-June exports by around five percent to help oil group Opec prop up world oil prices.

However, official statistics show that Russia had abandoned the deal as early as March, when it exported record volumes that traders say beat the previous all time highs.

The Russian government has said it was trying to limit exports through Transneft and was not responsible for extra shipments bypassing the system, or for exports of oil products from its almost entirely private oil sector.

Industry sources also said that Russian oil firms had dramatically boosted shipments of oil products over the last few months to compensate for the previous restrictions on crude exports.

Khristenko said that oil product exports would remain high in the third quarter.

”Like in the second quarter, seventy five percent of fuel oil output can go to exports. I see no threat to our domestic needs.”

He said that fifty percent of gas oil output had been exported between April and the beginning of July, but added that a working group would analyse this week whether special export restrictions were needed in the third quarter due to the harvesting season.

However he added that he believed the current 400,000 tonnes of gas oil stocks at refineries was high enough, as well as stocks of gasoline at 570,000 tonnes. He said that only ten percent of Russia's total gasoline output was currently exported.

Russian oil output is set to grow to seven and a half million barrels per day during 2002 from the seven million achieved during 2001.

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