MOSCOW (AP) -- As OPEC ministers gather in Algeria this week, attention has turned to Russia and whether the world's second-largest energy producer has the willingness, or the ability, to help the cartel stop tumbling prices.
Unprecedented price declines have severely strained the economies of oil producing nations, including Russia's. A high-ranking government economics official said Friday that the Russia had entered a recession, a stunning turnaround for a nation that has enjoyed an average of 7 percent growth over the past eight years.
That growth has been driven by soaring oil prices.
OPEC, which accounts for about 40 percent of global crude supply, is expected to announce substantial output cuts Wednesday when it meets in Oran, Algeria. The group has already announced 2 million barrels in daily production cuts with little effect and is lobbying Russia to help take more crude off the market.
Russia has robustly defended its energy independence, in part because it is much more difficult for it to make voluntary production cuts compared with other oil producing nations.
Russia's oil producers operate in harsh climactic conditions, and it is both difficult and costly to shut down production temporarily at the fields located in the environs of Siberia because pipes and wells can freeze.
Moreover, unlike OPEC member nations, Russia's oil industry is a mixture of state-owned and private companies -- many with shareholders that do not answer to the Kremlin.
"They probably don't want to join OPEC, but at the same time there's been a lot of change," said Ron Smith, strategist at Alfa Bank in Moscow. "Every oil-exporting country is hurting."
Oil prices have slumped by more than a $100 a barrel since the summer and is trading below $50 a barrel now. That has jeopardized essential public projects in oil producing nations.
Russia has forged closer ties with OPEC in recent months, but it has shied away from direct coordination. Late last week, President Dmitry Medvedev gave his strongest backing yet to OPEC, conceding that Russia could cut production or even join the cartel. Russia is sending a high-level delegation to Algeria this week.
Russia is already producing less oil this year and is headed for the first annual drop in a decade -- a product of underinvestment, partial re-nationalization of the oil industry and what critics call an oppressive taxing structure.
Russian crude exports dropped sharply in November, as oil companies grumbled over high export taxes at current oil prices.
That could enable the Kremlin to fend off a concrete commitment -- or dress up declines as a coordinated cut.
Russia currently produces around 9.8 million barrels per day and some industry estimates say production could fall by between 200,000 and 500,000 barrels per day if low prices force companies to slash investment.
OPEC is looking for Russia to cut between 200,000 and 300,000 barrels per day -- roughly in line with the expected decline -- the head of Russia's largest privately owned producer Lukoil, Vagit Alekperov, said Monday, according to Interfax.
According to Alfa Bank, if prices returned to the $50-$60 range with Russian production declines and OPEC cuts, Russia could recoup the losses from overall oil sales.
"They've said they're ready to work closer. They are sending bigger and bigger delegations to OPEC meetings," said Olivier Jakob, managing director of Swiss-based Petromatrix. "The next step is to exchange data before making the big political decision. It's still slightly too early (to cut production)."
Russia could control output by introducing tax breaks or other incentives to encourage oil companies to comply with voluntary oil cuts, analysts say.
"They could potentially introduce a stimulus package to maintain production at the good wells and remove marginal wells," said Artyom Konchin, an energy analyst at Unicredit SpA in Moscow. "Whatever they do, it will likely be at the expense of the government."
If pressured, Moscow could even make it unprofitable in the near term for companies to export crude by imposing high export taxes.
"In the longer term, they have all the political powers they need to change the laws," said Alfa's Smith.
But British-Russian oil company TNK-BP, Russia's third-largest oil producer, said last week that production cuts did not make sense.
"It's not effective to intervene and try to swim against the economic tide," TNK-BP vice president Jonathan Kollek told reporters. "OPEC has not shown themselves very efficient in pushing prices up, nor for that matter in reducing production."
Russia too, has a spotty record in adhering to quotas.
Moscow has agreed to cut exports in concert with OPEC measures before, but it directed excess output to refineries and exported refined products instead.
There are signs, however, that demand has fallen so far that even a coordinated effort between OPEC and Russia would not have nearly the power it once had.
The Paris-based International Energy Agency said that global oil demand will shrink this year for the first time in 25 years.
Demand is falling from Europe to the United States, where on Friday, Baker Hughes Inc. reported that the number of drilling rigs decreased for just the second time in five years.
Drivers in the U.S., the world's biggest energy consumer, drove 9 billion fewer miles in October, the Federal Highway Administration reported Friday.