Russia needs time to boost oil exports

Jan 09, 2003 01:00 AM

Bottlenecks in Russian ports and pipelines are likely to frustrate OPEC, which hopes that the world's second biggest oil exporter will quickly boost supplies, a senior Russian state oil official said. "We have some spare capacity, but it will take at least three to four months to reactivate," the official with state oil pipeline monopoly Transneft said.
Oil cartel OPEC is considering raising oil output by 1.0-1.5 mm bpd to cover a shortfall caused by a long-running strike in Venezuela and help bring prices back within the cartel's preferred range of $ 22-$ 28 a barrel from the current level of just below $ 30.
OPEC has said it hopes independent suppliers such as Russia, Norway and Mexico will contribute to the output hike. Russia's Energy Minister Igor Yusufov said the government would help OPEC producers stabilise prices.

The official said Transneft saw Russia's output, growing for the fifth straight year and currently standing at 8.0 mm bpd, to rise by another 10 % in 2003. He added that the firm was actively developing new export routes to avoid a domestic glut.
However, these plans could be implemented at best by the end of 2003, he said. He added the simplest way to boost pipeline exports, currently running at about 3.2 mm bpd, would be to use spare capacity at Latvia's port of Ventspils.
"I don't know whether such plans exist, but even reactivating Ventspils will take between two to three months," he said. Transneft has slashed oil shipments to Ventspils to zero in January 2003 from around 350,000 bpd at the beginning of 2002, saying Russian oil firms preferred other routes.

Market players, however, have said the state monopoly is putting pressure on the port owners to allow it to buy a stake in the terminal, once the biggest outlet for Russia's crude on its way to northern Europe, at a bargain price. "We have spare capacity on the Druzhba pipeline (to central Europe) but a lot of things should be done on the territory of neighbouring Belarus," the official said, referringto the need for more pumping stations and other facilities.
He also said Transneft planned to add two or 3 mm tons to the annual capacity of its main Black Sea export port of Novorossiisk, currently exporting 45 mm tpy. "We could also try to expand more quickly than planned Primorsk (on the Gulf of Finland) to 30 mm tons from the current 12 mm," he said.
"We also hope the Druzhba-Adria link (from Russia to the Croatian Adriatic port of Omisalj) could come on stream by the end of 2003. This would add at least 5 mm tons to our export capacity," he said.

In 2002, Russia, which heavily depends on oil revenues, made a pledge to OPEC to cut oil exports by 150,000 bpd in January-June to prop up prices, but official statistics showed it quickly went back on the deal and boosted supplies as early as March.

Source: The Russia Journal Daily
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