Translated material
One warrior in an oil field
Russia has started its game in world markets
Russia unilaterally withdrew from an informal interstate agreement on joint actions in the oil market. The government on Friday lifted all oil export restrictions imposed on January 1 at the request of the Organization of Petroleum Exporting Countries (OPEC) and independent producers Norway, Mexico, Oman and Angola.Government officials have repeatedly stated that at the next meeting of Mikhail Kasyanov with the heads of the country's largest oil companies, the prospects for Russian oil exports in the third quarter will be discussed. Previously, Russia promised to maintain restrictions throughout the second quarter of 2002, that is, until July 1. However, at the meeting it was decided to resume normal exports immediately, in May. “The time has come to gradually lift restrictions on oil exports,” the Prime Minister said following the meeting.
This unexpected move is explained, firstly, by the stabilization of world prices above $25 per barrel, and secondly, by the arrival of US President George W. Bush in Russia this week on a state visit. The United States is very dissatisfied with high oil prices, which are hampering the recovery of the national economic growth rate, and for them, any actions by oil exporters aimed at reducing prices are good. By increasing oil supplies, Russia will be able to return oil prices to the corridor of 20-25 dollars per barrel, which Mikhail Kasyanov called the most acceptable for oil exporters and importers.
“OPEC is too greedy an organization,” says Yukos head Mikhail Khodorkovsky, who back in April predicted that Russia would lift all restrictions in May. -- The $22-$28 per barrel corridor chosen by the cartel sets the bar too high, which unnerves importers and encourages exporting countries to invest in expensive projects that pay off at high prices. As a result, there is too much oil and prices plummet.” According to a Vremya Novostey newspaper source in the government, oil companies came to the meeting with Kasyanov with an agreed position - to lift the restrictions immediately.
Russia's actions have not yet caused a sharp drop in oil prices. On the London Stock Exchange, prices initially fell by more than 50 cents to $25.76 per barrel, but by the end of May 17 they had risen to $26.36, which was only 2 cents less than the price on May 16. Fears of escalating conflicts in Asia are forcing traders to overpay for oil, which could become even more expensive at any moment.
OPEC countries said they would not respond to Russia's actions. The decision on the lifting or extension of restrictions by cartel countries for the third quarter, as previously planned, will be made at the end of June. Norway also said on Friday that it will review its export policy only from July 1 and will most likely decide to abolish existing quotas. OPEC hopes that Russia will take part in an informal meeting of OPEC countries and independent oil producers in Vienna on June 20-21. “We will insist on the continuation of Russia’s cooperation with OPEC,” a cartel representative told Interfax.
However, Russia has already started its game in the oil market. Mikhail Kasyanov said that exports will increase gradually, taking into account the global market situation. Since January 1, supplies to the near and far abroad have been reduced by 150 thousand barrels per day, and it is these volumes that the government is now going to distribute between companies in addition to the previously approved schedule. However, the increase may be more significant. Specific figures will be determined by a government commission headed by Deputy Prime Minister Viktor Khristenko at its meeting on May 24.
Russia cannot yet strongly influence the global situation. Unlike Saudi Arabia, for technical reasons we are not able to easily increase or decrease export volumes by hundreds of thousands of barrels per day. Nevertheless, it is logical to expect a sharp increase in Russian supplies: oil production in the country is growing by leaps and bounds. The Ministry of Energy has already had to adjust its production forecast from 352 million tons in 2002 to 360-365 million tons. “It is possible that production will amount to 370 million tons,” says Deputy Minister Ivan Matlashov (last year the companies produced 348 million tons) .
The Ministry of Energy is very concerned that the lifting of restrictions and an increase in oil supplies abroad will lead to an increase in prices for petroleum products on the domestic market. The ministry is trying to provide cheap diesel fuel for agriculture by increasing export duties from 25 euros to 35 euros. This idea is currently being discussed in the government. At a meeting with Mikhail Kasyanov, oil companies tried to protect themselves from such surprises and proposed to consolidate the procedure for establishing duties on petroleum products by federal law, but the prime minister spoke in favor of maintaining the government’s freedom of action in this matter.
The government is pushing oil companies to create an oil exchange. “Companies are preparing to create an exchange on which in the future it will be possible to sell up to 25% of the oil produced,” Mikhail Kasyanov told reporters on Saturday. According to him, the price of oil set on the exchange will allow regional and federal authorities to more effectively calculate the amount of taxes. Meanwhile, oil companies surveyed by the Vremya Novostey newspaper were more than skeptical about the government’s idea. “We are gradually pushing this idea, and the companies are maturing,” a high-ranking government source told our newspaper. The main ideologist of the oil exchange is the Ministry of Antimonopoly Policy (MAP), which back in 1999 promised to oblige companies to sell up to 25% of oil through the exchange, but the companies successfully failed this project. For the normal functioning of the Russian stock exchange there are not enough buyers or sellers, since more than 90% of the country’s oil is produced by large oil holdings that process oil at their own factories. “For us, oil is not an exchange commodity, but hay, from which cows then make the final product - milk,” says LUKOIL vice-president Leonid Fedun. MAP cannot yet come up with a mechanism to encourage companies to make intra-corporate transactions through the stock exchange.