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Authors: Armen Oganesyan
Editor-in-Chief of International Affairs
ACCORDING TO Suleiman Jasir Al-Herbish, Di-
rector-General of the OPEC Fund for Interna-
tional Development (OFID), there will be no more
cheap oil.
Since 1976, OFID has been a major international
development agency, as well as an authoritative re-
search and analysis center. The Fund's main task is
to strengthen cooperation and OPEC's influence
in developing countries.
In recent years, the oil market has "turned somer-
saults" that have made many experts feel dizzy.
However, the person I was talking to meant something quite different: the cost of oil production
in the world is rising rapidly. Russian analysts naturally agree with this. But it is not only that the
cost of production of a ton of oil has increased. OPEC's mission, Mr. Al-Herbish believes, is to
ensure security of oil supply today and in the future. For this purpose, he said, we must spend bil-
lions of dollars on ensuring sustainable development of the world economy, taking into account
not only its immediate needs, but also possible emergencies. As he put it, we must invest in "future
oil."
When asked to comment on the recent deal between BP and Rosneft, Mr. Al-Herbish said he fully
understood the logic of attracting foreign investment when it was a matter of developing oil and
gas fields in difficult natural conditions.
The Director-General of OFID thinks it critically important to reconsider OPEC's basic principle
formulated 50 years ago at the time of its foundation. According to this principle, the OPEC
member countries use their oil revenue mainly to balance their national budgets. In the view of
Mr. Al-Herbish, this provision has fettered and continues to fetter the leading oil producers in
their movement towards diversification. The task today, he said, is just the opposite: producer
countries should not rely on oil as the main instrument for ensuring a balanced budget.
Shortly before the meeting in Vienna, International Affairs held a roundtable on the topic of "Rus-
sia and OPEC" with the participation of the Economic Policy Department of the Russian Ministry
of Foreign Affairs, Soyuzneftegaz specialists, experts from research and academic institutions,
business people and independent analysts. The participants in the discussion agreed that Russia
lacks a coherent strategy for cooperation with OPEC.
Russian experts are unanimous: oil production conditions in Russia and OPEC differ widely, and
socio-economic imbalances do not allow us to put the issue of Russian membership of OPEC on
the current agenda. In principle, Mr. Al-Herbish agrees with this. But what prevents Russia, he
asked, from taking a more active part in OPEC activities and working together with OPEC member
countries? What indeed?
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No More Cheap Oil