Russia Exploits OPEC Cuts, Tops Saudi Arabia in Oil Exports

Last Updated Sep 8, 2009 8:54 PM EDT

Russia's continued exploitation of OPEC's oil production cuts gives credo to the old Heinz slogan "the best things come to those who wait."

Not too long ago, rhetoric from Russia gave the impression it was aligned with the Organization of Petroleum Exporting Countries in a mission to control oil prices. Russia, the largest non-OPEC producing country in the world, had volunteered to cut production in the weeks leading up to December's special OPEC meeting -- a move it had previously resisted.

Russia's Deputy Minister Igor Sechin made a commitment to cut oil deliveries in the days before OPEC's March meeting, saying "We support the reduction of deliveries to the market, and Russia will participate in this work."

And all of this, of course, fueled speculation of a future with Russia as an OPEC member. Russia, as BNET predicted back then, never joined the oil cartel.

Instead, it kept up the rhetoric, waited and watched as OPEC's member countries -- at least most of them -- cut oil production. The opportunity OPEC's production cuts provided were simply too tough to pass up.

The result? Russia has topped Saudi Arabia in oil exports for the first time since the Soviet Union's collapse, Bloomberg reported today.

Saudi Arabia's exports of crude oil and refined products fell to about 7 million barrels a day in the second quarter, from 7.39 million in the first quarter, according to International Energy Agency data used in the Bloomberg report. Meanwhile, exports from Russia rose to 7.4 million barrels a day from 7.25 million.

Russia doesn't appear to be slowing. Bloomberg noted, Russia's crude oil production climbed 1.3 percent in August from the same month last year to 9.97 million barrels a day and exports grew 5.9 percent.

Russia's oil export duty also has helped spur production. The tax was $372.2 per metric ton in October 2008 and was lowered a number of times until it reached $108 to $112 per metric ton earlier this spring. The export duty has risen in recent months. However, the country has also abolished the export duty from 13 new developments in East Siberia. State producer OAO Rosneft, which is chaired by Sechin, has said it plans a considerable increase in output in the second half of the year, helped mainly by the tax breaks.

Russia and its unabated oil output will certainly be among the topics discussed by OPEC's ministers at its planned (ordinary) 154th meeting Wednesday in Vienna, Austria.

Whether OPEC and Russia's relationship has permanently soured is difficult to predict. Russia, which has attended numerous OPEC meetings as a guest, was not invited this time around. But other non-OPEC oil producing countries, which have attended OPEC meetings in the past, weren't invited either.

The invitation snub may have more to do with a surprise OPEC announcement than its disapproval of Russia's increase output.