Russia warns of oil production cuts

MOSCOW, Oct. 30 (UPI) -- The top two Russian oil firms warned of further production cuts in 2009 if prices continue to stagnate or Moscow does not intervene to lower taxes.

The 12-member Organization of Petroleum Exporting Countries last week announced it would cut its production quota by 1.5 million barrels per day in an effort to stem the declining price of crude oil on world markets.

Leonid Fedun, vice president of Russia's largest oil firm, LUKoil, said joining the oil cartel would "be a boon for Russia," which relies heavily on economic benefits from its natural resources, The Moscow Times said.

Russian energy firms have faced a declining access to credit to finance their investments in infrastructure and elsewhere.

Moscow, in order to compensate for the production cut, needs to lift property taxes on the wells that would cease operations in the decline, Fedun said.

For his part, Vadim Yakovlev, vice president of finance for Gazprom Neft, the oil arm of energy giant Gazprom, predicted oil production could fall by more than 5 percent without some form of intervention, putting the sector in further jeopardy.

Meanwhile, Russian Deputy Premier Igor Sechin said Russia would not follow OPEC production cuts, and on Wednesday, government spokesman Dmitry Peskov said there was no interest in joining the oil cartel.