Russia ‘disagrees with OPEC on fair oil price’

Comments by Putin at the St. Petersburg International Economic Forum have set the stage for tough talks between Russia and its partners over policy on the global oil market. (AFP/File photo) 
Updated 07 June 2019

Russia ‘disagrees with OPEC on fair oil price’

  • Putin says Moscow will take joint decision on output with colleagues from the producer

ST. PETERSBURG: President Vladimir Putin said on Thursday that Russia had differences with OPEC over what constituted a fair price for oil, but that Moscow would take a joint decision on output with OPEC colleagues at a policy meeting in the coming weeks.

Putin’s comments have set the stage for tough talks between Russia and its partners over their policy on the global oil market, which are expected to take place within a month.

OPEC and large oil producers led by Russia are due to meet in Vienna in the end of June or early July to decide on their policy for the next half of the year as the current deal expires.

They have agreed to cut their combined production by 1.2 million barrels per day, or more than 1 percent of global output, from Jan. 1 until the end of June to support oil prices and balance the global crude market.

Russia joined the efforts with OPEC in 2016 and their cooperation has helped to stabilize oil pieces and ease an overhang of stockpiles.

Speaking at a gathering with the foreign media in St. Petersburg, Putin said that he would not reveal what Russia and its partners would do on the oil market in the second half of the year, but said that several factors, including higher oil demand in the summer, should be taken into account.

Putin also pledged to continue cooperation with OPEC, though Russia and the organization’s kingpin, Saudi Arabia, have certain differences on so-called “fair price” of oil.

“This is natural,” said Putin. “Look at the price of a barrel,
which Saudi Arabia uses to calculate its budget. This is significantly higher than for us,” Putin said, adding that Russian budget implied an oil price of $40 per barrel.

According to an International Monetary Fund official, Saudi Arabia would need oil priced at $80-$85 a barrel to balance its budget this year. Oil prices are trading at more than $60 per barrel, pressured by global trade disputes.

Putin said a price of $60-$65 a barrel suited Moscow and that the decision by OPEC and its oil exporting allies should also take into account the decline in production in Iran and Venezuela, and problems in Libya and Nigeria. 

Meanwhile, Russia’s second-biggest oil producer Lukoil plans to propose that Moscow extend its participation in a global oil production-cutting deal at
existing terms to the end of this year, its chief executive Vagit Alekperov said.

“I will propose maintaining the deal and monitoring (global oil) inventories, excluding Iran,” Alekperov said, referring to an increase in oil prices.




BMW picks insider Zipse as CEO to catch up with rivals

Oliver Zipse
Updated 33 min 9 sec ago

BMW picks insider Zipse as CEO to catch up with rivals

  • German giant has lost ground to Mercedes-Benz and Tesla as tech steps up

FRANKFURT: BMW has named Oliver Zipse as its new CEO, continuing the German carmaker’s tradition of promoting production chiefs to the top job even as the auto industry expands into new areas such as technology and services.
Hailing Zipse’s “decisive” leadership style, BMW hopes the 55-year-old can help it win back its edge in electric cars and the premium market  from rival Mercedes-Benz.
But some analysts questioned whether Zipse was the right choice with new fields such as software and services like car-sharing becoming increasingly important.
“What is intriguing is the cultural bias to appoint the head of production. It works sometimes but ... being good at building cars is not a defining edge the way it was 20 years ago,” said Jefferies analyst Philippe Houchois.
Current CEO Harald Krueger, and former chiefs Norbert Reithofer, Bernd Pischetsrieder and Joachim Milberg were all former production heads.
Zipse joined BMW as a trainee in 1991 and served as head of brand and product strategies and boss of BMW’s Oxford plant in England before joining the board.
He will become chief executive on Aug. 16, taking over from Krueger who said he would not be available for a second term.
“With Oliver Zipse, a decisive strategic and analytical leader will assume the Chair of the Board of Management of BMW. He will provide fresh momentum in shaping  the future,” said Reithofer.
Zipse helped expand BMW’s efficient production network in Hungary, China and the US, in a move that delivered industry-leading profit margins.
Under Krueger, BMW was overtaken in 2016 by Mercedes-Benz as the best-selling luxury car brand.
It also had an early lead over US  rival Tesla in electric cars, but scaled back ambitions after its i3 model failed to sell large numbers.
Reithofer initially championed Krueger’s low-key consensus-seeking leadership, but pressured him to roll out electric vehicles more aggressively, forcing Krueger to skip the Paris Motor Show in 2016 to reevaluate BMW’s electric strategy.
Krueger’s reluctance to push low-margin electric vehicles led to an exodus of talented electric vehicle experts, including Christian Senger, now Volkswagen’s (VW) board member responsible for software, and Audi’s Markus Duesmann, who is seen as a future CEO of the company.
Both were poached by VW CEO Herbert Diess, a former BMW board member responsible for research who was himself passed over for BMW’s top job in 2015.
VW has since pushed a radical 80 billion euro ($90 billion) electric car mass production strategy, and a sweeping alliance with Ford.

Other skills
“A CEO needs to have an idea for how mobility will evolve in the future. This goes far beyond optimising an existing business,” said Carsten Breitfeld, chief executive of China-based ICONIQ motors, and former BMW engineer. “He needs to build teams, attract talent, and promote a culture oriented along consumer electronics and internet dynamics.”
German manufacturers have dominated the high-performance market for decades, but analysts warn shifts towards sophisticated technology and software is opening the door to new challengers.
“Tesla has a lead of three to four years in areas like software and electronics. There is a risk that the Germans can’t catch up,” UBS analyst Patrick Hummel said.
Germany’s Auto Motor und Sport car magazine, normally quick to champion German manufacturers, this week ran a cover questioning BMW’s future.
“Production expertise is important, but if you want to avoid ending up being a hardware provider for Google or Apple, you need to have the ability to move up the food chain into data and software,” a former BMW board member said.