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 The no-show by the chief executive of Russia's biggest oil producer,
Rosneft, at Wednesday's meeting of oil executives and government
officials and his silence suggests the Kremlin has not yet decided
whether to back such a move.
The meeting raised the possibility of rare joint action with OPEC,
of which Russia is not a member, because of a global oil glut but
Kremlin spokesman Dmitry Peskov has said there is "nothing to talk
about in a tangible sense" for now.
The final decision will lie with Putin but Sechin's input is likely
to be crucial as Russia considers acting in tandem with OPEC for the
first time since an ill-fated 2001 deal at the start of Putin's
first presidency, when Russia promised modest cuts but raised
exports instead.
Sechin has repeatedly made clear in public that Russia, the world's
largest oil producer, will not blink first in the battle with OPEC
over market share and pricing even though the Russian economy is
highly dependent on oil exports and prices have sunk below $30 per
barrel from $115 some 18 months ago.
At the table with oil minister Alexander Novak, billionaire
executives of private Russian companies and state pipeline officials
on Wednesday was Rosneft's chief financial officer, Svyatoslav
Slavinsky, who said little about his boss's views, participants at
the meeting told Reuters.
The meeting agreed Russia should talk to Saudi Arabia and other OPEC
countries about output cuts, although the only OPEC members to
clearly support a production cut so far are Algeria, Equador and
Venezuela.
"It was a proper, serious discussion. But Sechin wasn't there and no
deal is possible without him," said one person who took part in the
meeting but asked not to be named because of the sensitivity of the
matter.
"The debate we had could be framed this way: Do we carry on with
prices at $35 per barrel for the next two years without doing
anything, or do we do something and have prices at $50?" the source
said. "So we decided it is better to talk to the Saudis".
CRITICISM OF OPEC
OPEC kingpin Saudi Arabia has repeatedly called on non-members to
contribute to output cuts if they want the organization to help
producers deal with the oil glut, which follows a boom in U.S. shale
oil and a decision by OPEC to pump more oil to try to win back
market share.
"It was clear to everyone in the room that if we agree to cooperate,
the Saudis will ask for a cut of 4-5 percent or 400,000-500,000 bpd
from Russia. Then, opinions differed whether Russia could really do
it," another participant said.
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The Russian rouble sank to an all-time low this month and, with a
parliamentary election scheduled this year and a presidential
election due in 2018, pressure is rising on the Kremlin to protect
state revenues and limit public discontent.
Putin sees the oil sector as an important factor in Russia's global
standing and in contacts with the West on issues such as the
conflicts in Syria and east Ukraine as Moscow seeks the lifting of
sanctions over its seizure of the Crimea region.
It was the head of pipeline monopoly Transneft, Nikolai Tokarev, who
spoke to reporters after this week's meeting. Like Sechin, Tokarev
is close to Putin, having worked in the same KGB department in the
Soviet era.
Transneft, which is the world's largest pipeline system and controls
Russian export flows, would have a role in ensuring state and
private firms did not exceed their quotas if a deal were reached
with OPEC.
Sechin, 56, who helped Putin consolidate a third of Russian oil
industry under Rosneft following the chaotic privatization of the
1990s that followed the collapse of the communist Soviet Union, has
until now left no doubt about his position on joint output cuts with
OPEC.
"Sechin has long been totally against the idea. He believes that, as
a superpower, Russia should not be making this type of alliance,"
said a source from outside Russia who has been involved in meetings
between OPEC and Russia in recent years.
He has also criticized OPEC, telling London's International
Petroleum Week a year ago that it had "lost its teeth" and "lost the
unity of its members and in some cases is not respecting the
interests of some of its members."
(Editing by Timothy Heritage)
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