Russia outlines plans to support oil prices

VIENNA (Reuters) - Russia on Sunday proposed a list of measures to support world oil prices, calling for lower output from producers as part of the plan.

Deputy Prime Minister Igor Sechin outlined the wide range of ideas to OPEC oil ministers ahead of their meeting in Vienna.

Greater coordination among producers will raise concerns among oil consuming nations, particularly those in Europe that were affected by disruptions to Russian gas supplies earlier this year.

But although Sechin claimed Russia had played a part in helping OPEC to cut supply, analysts have said Russian production is falling because of a lack of investment in infrastructure and not because of a deliberate policy.

“At the end of the day, it does not help OPEC clean up total oil inventories,” David Kirsch, director of market intelligence services at Washington-based PFC Energy, said of the Russian measures.

“It’s really just a show game.”

OPEC has promised cuts totaling 4.2 million barrels per day from output since September and the group is roughly a million bpd away from that target. The curbs have helped stabilize oil prices above $40 a barrel after a dizzying $100 drop from a record high in July 2008.

Russian output dropped for the first time in a decade last year and is still falling.

Sechin said from Jan-Feb this year output fell by 1.2 percent from the same period last year.

Apart from lower output from OPEC and non-OPEC producers, to try to raise the price, Sechin also outlined technical measures.

They included longer term supply contracts, more sophisticated benchmarks and currency references as well as larger oil inventories in producer countries.

“We need to see less volatility in the oil market,” Sechin said.

He also repeated his plan to host a gathering of oil producers in Moscow at the end of the year. Russia’s energy ministry and OPEC should also sign a joint memorandum, Sechin said.

Sechin was leading a Russian delegation which also included Energy Minister Sergei Shmatko. Russia regularly attends OPEC meetings as an observer along with other producers from outside the group.