TYUMEN, Russia (Reuters) - Russia is working toward creating a state reserve to buy crude from producers when prices are low, potentially removing up to 16 million tons of Russian oil from export markets, a top energy official said on Monday.
Deputy Prime Minister Igor Sechin, who oversees the oil and gas sector, said the move could help the Organization of Petroleum Producing Countries (OPEC) stabilize oil prices.
Sechin traveled to Algeria in December and told OPEC delegates that Russia, the world’s second-largest oil exporter and the biggest outside OPEC, could cut exports by 16 million tons, or 320,000 barrels per day, if oil prices fell further.
As oil prices have stabilized around $40 per barrel, Russian exports have instead risen to above 4 million bpd in the past two months in what traders said was further proof Russia will limit cooperation with OPEC to verbal pledges.
On Monday, Sechin resurrected the same 16 million tons figure, saying Russia could buy this volume from its companies for the state reserve. He did not specify a time period.
Russia produces around 9.7 million bpd, or 485 million tons of oil, per year. Purchases of 16 million tons of oil per year into the reserve would represent over 3 percent of Russia’s annual oil production.
“We are getting ready for an OPEC session, which will take place in March, and we are studying reserve options,” Sechin told reporters as he traveled to West Siberia to inaugurate the opening of a major field by oil firm TNK-BP.
“Such a reduction could reach up to 16 million tons, depending on market conditions. It is possible to study the possibility of buying this crude from the market,” he said.
“You will agree that, at such prices, it is wise to talk about stockpiling options. OPEC is monitoring crude inventories very closely,” he said.
Sechin said last October Russia could become a swing producer to influence global prices, resurrecting a decade-old idea of a big state oil reserve.
Russia has long toyed with the idea, but the expensive and logistically difficult plan was never implemented as the government and private companies failed to reach a compromise.
Specifying a time period and elaborating on the means of stockpiling are key questions left unanswered by Sechin’s comments.
“He’s using all sorts of caveats. It’s a politically astute statement, and he’s not really committing to anything,” Mike Wittner of Societe Generale said.
“I’m skeptical that they’ll do this. The Russian economy continues to deteriorate and they need the money. I think they’ll sell every barrel they produce,” Wittner said by telephone in London.
If set up, Russia’s stockpile would differ from emergency reserves created in the 1970s in some big consuming nations, such as the United States, which are used to soothe supply problems rather than influence prices.
The current oil production scheme in Russia does not allow the country to change its flows significantly, as any well shut down in Siberia usually leads to its costly repair.
Additional reporting by Chris Baldwin in London, writing by Dmitry Zhdannikov; editing by Sue Thomas
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