Russia will not work with Opec to curb a global oil glut even after prices hit the lowest level since the financial crisis last month, says the chief executive of Rosneft.
The comments by Igor Sechin, a close ally of Vladimir Putin, the Russian president, damp speculation that contacts between Moscow and Riyadh could yield a supply agreement.
The Rosneft chief, also a former Russian deputy prime minister, told the Financial Times on Monday that the “golden age” of the oil producers’ cartel had passed.
“The Russian oil industry is private with a high number of foreign shareholders,” Mr Sechin said. BP owns 20 per cent of the Russian state-backed oil company, which is majority owned by the Kremlin.
“The Russian government cannot administer the oil industry like an Opec country can,” he said. Russia would also face technical difficulties in shutting production in regions such as Siberia, where extremely cold winters could cause wells to fracture if they were shut down.
Mr Sechin, who was Russia’s oil minister during the financial crisis, said increased supplies from Saudi Arabia and other Opec members were partly responsible for the oil crash, following the decision by the cartel to keep the taps wide open last November in the face of rising supplies.
“It needs to be recognised that Opec’s ‘golden age’ in the oil market has been lost,” Mr Sechin said. “They fail to observe their own quotas [for oil output]. If quotas had been observed, global oil markets would have been rebalanced by now.”
Mr Sechin said Rosneft’s cost of production had fallen to less than $3 a barrel due to the drop in value of the rouble from about $5 a barrel last year.
“Our cost is one of the lowest in the oil industry,” he said. “We can compete with Middle Eastern producers.”