Rising Russian output problem for OPEC, Libya says

By Alejandro Barbajosa

VIENNA (Reuters) - OPEC has less room to raise production as global oil use recovers because of Russia's increasing output, said Shokri Ghanem, the head of Libya's delegation to the organisation.

Organization of the Petroleum Exporting Countries (OPEC) ministers on Wednesday agreed not to change oil output targets they are already exceeding, anticipating that demand will pick up later in the year to mop up extra barrels the producers may pump.

Russia inaugurated the East Siberia-Pacific Ocean (ESPO) pipeline in December, targeting additional exports of as much as 250,000 barrels a day (bpd) of medium sour crude in the first quarter and up to 600,000 bpd when it completes a pipeline to China in the next two years.

"If it is increasing the production, this means increasing the world supply," Ghanem told Reuters on Thursday in Vienna, where OPEC met a day earlier.

"Of course this will cut the share of OPEC to increase its production because they don't want to cut down their production, so we'll end up in some problems," Ghanem said of rising ESPO output.

Russian ESPO crude is putting pressure on prices of waterborne Middle Eastern crude grades sold in Asia due to its lower shipping costs, better quality and shorter delivery times, traders and analysts have said. Saudi Arabia cut Asian oil prices to 14-month lows for April.

Targeting Asian demand growth, OPEC members are mostly supplying customers in the region with full volumes even as they maintain curbs to Europe and the United States. Even so, the market is struggling to absorb the crude, traders have said.

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