Oil price deal sought with Russia

OPEC's secretary general Ali Rodriguez is looking for a deal

MOSCOW, Russia -- Top OPEC figures opened talks with Russian officials on Monday in an effort to suppress oil production and boost prices.

Russia, which is not an OPEC member, has a major influence on prices being the world's second-largest oil producer.

It has already agreed to cut production in the first quarter of 2002 by five percent, helping increase the world price of oil by 20 percent on last year's low of about $17 per barrel.

But the Organization of Petroleum Exporting Countries is trying to persuade Russia to keep production down during the second quarter in an attempt to secure a further price rise of 10 percent.

OPEC's Secretary-General Ali Rodriguez and its president Rilwanu Lukman met Russian Prime Minister Mikhail Kasyanov, energy minister Igor Yusufov and deputy foreign minister Viktor Kalyuzhny, who is influential in shaping energy policy.

But they will have their work cut out, Stephen O'Sullivan of the United Financial Group, told CNN on Monday.

Domestic Russian demand is down to $3- $4 per barrel, which is not far above the direct production costs for most of the Russian oil companies.

VIDEO CNN's Jill Dougherty reports on the conflicted position Russia is in regarding oil production (March 5) Play video (QuickTime, Real or Windows Media)

Also, the final decision on whether to cut or not lies with Russia's mostly private oil sector, and not the Russian government.

Rodriguez said on his arrival Sunday: "Russia is playing a very important role at the present.

"We have come in order to continue our dialogue with the authorities of Russia.

"And also to strengthen the cooperation which has developed over the years between us and them in the interest of maintaining stability on the international oil market."

OPEC members trimmed its collective production by 1.5 million barrels a day starting in January in an effort to sustain prices.

Russia, under heavy OPEC pressure, agreed to cut exports by 150,000 barrels a day in the first quarter of the year.

Yusufov was quoted by The Associated Press on Sunday as saying that Russia wants to keep the price of crude oil at a "fair level" of $20-$25 a barrel, and he expressed satisfaction that prices recently returned to this range. Brent oil traded at $21.89 Friday.

Russia's government relies heavily on oil revenues and the country's young oil giants have been ramping up production in recent years. That increased production and high world oil prices has helped drive the country's economic growth the past two years.

Rodriguez' visit comes before the March 15 OPEC meeting in Vienna, Austria. He said last week the cartel was unlikely to adjust production levels at that meeting.