OPEC WILL BE PLEASED

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OPEC WILL BE PLEASED

Izvestia, December 6, 2001, p. 2

It was Kasianov’s third meeting with oil company executives since OPEC requested independent exporters to cut oil exports by 500,000 barrels per day. OPEC itself will cut exports by 1.5 billion barrels if this is done.

The meeting lasted less than an hour, and Russia tripled the initially planned reduction quota. “This is the first time in years that Russia’s foreign policy is not isolate, and actually corresponds with domestic policy and economic considerations,” said Slavneft Vice President Andrei Shtorkh. “Don’t waste time looking for hidden connections between OPEC’s request and our decision. The decision was made on the basis of a market analysis. Had we cut exports by 200,000 barrels a day right away, it would have meant we are prepared to do whatever OPEC wants. We are reducing oil exports gradually, in order to avoid dramatic oil price fluctuations. Oil prices should return to the fair level of $20-25 a barrel now, or at least to $18-22.”

The oil markets responded to the news from Moscow instantly. As far as OPEC is concerned, Russia’s decision will reinforce other independent exporters in their intention to cut exports too. Norway and Mexico announced their plans to cur exports; they were only waiting for news from Moscow.

Some observers attribute the decision to cut oil exports (not production, as OPEC would have really wanted) to differences among Russian oil companies. LUKoil and TNK advocated a cut in exports and eventually in production. YUKOS and Sibneft said everything should be left as it is. Insiders say that YUKOS and Sibneft are taking this position due to the influence of Western capital within them, which is opposed to higher oil prices.

The decision will be valid only in the first quarter of 2002. Sources in oil companies say oil exports will indeed be cut, and the government will be able to monitor this. Cutting exports in winter is something Russia can do without any problems. Technological reasons alone automatically reduce exports by 20,000 barrels per day in winter.

Besides, the markets have been fairly skeptical until now about Russia’s promises to cut oil exports. On the other hand, OPEC itself would not balk at breaking its promises.

PUTIN IS LEAVING FOR GREECE

Izvestia, December 6, 2001, p. 2

The visit will be lengthy. Today Putin will meet and talk with Greek President Konstantinos Stefanopulos; tomorrow he will address students and professors at the Athens University; and he will spend Saturday touring Saloniki, Afon, and monasteries.

Construction of the Burgas-Aleksandrupolis pipeline is the number one topic in Russian-Greek economic relations. Russia needs the pipeline to pump Caspian oil via Bulgaria and Greece to Western Europe, as an alternative to the Georgian-Turkish route.

Russia needs the pipeline just badly enough to make the Greeks feel they can expect certain gas-related preferences. At his meeting with Russian journalists, Deputy Foreign Minister Zafeiropulos expressed the hope that Putin’s visit would finally revivie bilateral agreements in accordance with which Russia should be paid for gas with Greek-made goods and commodities, not in money. In other words, the matter concerns the barter accords signed in 1987 and 1988.

Zafeiropulos said he was sorry the new management of Gazprom, under Miller, undervalued barter accords. The Greeks are still offeing Russia fruit, cosmetics, and medicines in return for Russian gas…

EU EMISSARY BACK IN MOSCOW

Izvestia, December 6, 2001, p. 5

No specific agreements are likely to result, no matter what. On his arrival in Moscow, Lami immediately announced that the quota for Russian metal exports to Europe might be raised.

PRESIDENT PUTIN MEETS WITH BUSINESS OWNERS

Rossiiskaya Gazeta, December 6, 2001, p. 1

Putin congratulated delegates to the congress, and essentially gave them carte blanche. It was decided that representatives of the Association would also be included in the governmental Entrepreneurs Council.

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