|TOPIC OF THE ISSUE|
Moscow, Ashgabad and Kyiv are playing tag
In early January Ukraine was forced to accept the new price for Turkmen gas supplies. The gas price was hiked by 30%, to $58 per 1,000 m3. There are good grounds to believe that this forlorn for Kyiv outcome came as a result of Ashgabad's tenacity, with a sprinkle of Moscow help. No doubt that for Turkmenistan the deal represents a major success — at the same time, it just could be that this tactical breakthrough will backfire in short-term prospective.
|PERSON OF THE ISSUE|
On the New Year's Eve, Saparmurat Niyazov, the President of Turkmenistan, demonstrated not only his poetic genius but also superb political instincts and extreme agility. Taking advantage of Ukraine's «orange revolution», the Turkmen leader forced Kyiv to accept the new gas prices, earning for his country in less than a month over $400mn of extra revenue. This result could match money-making power of any oil&gas company.
|PHOTO OF THE ISSUE|
|Rosneft: in Kremlin's Wonderland|
The Kremlin's designs for Russia's oil sector, finally uncovered by the events in petroleum industry in the end of 2004 and early 2005, have also been reflected in its relations with state-owned vertically integrated Rosneft.
THOROUGH COORDINATION IS THE KEY TO SUCCESS
Over the past year, Kazakhstan produced a record high 59.22mn t (1.18mn b/d) of crude, 15.4% up on 2003. Operating in a highly competitive market, Kazakhstan's oil transportation sector proved to be up to the challenge. The leading place in the shipping sector belongs to the Kazakh state-owned pipeline monopoly, KazTransOil, both in terms of transportation volumes and diversity of destinations. OilMarket interviewed Kairat Serikovich Krymov, KazTransOil's general director. One conversation covered Kazakh pipeline systems expansion, cooperation with neighbouring countries on crude transits and preserving the quality of crude and opening new export routes
|EXPLORATION AND PRODUCTION|
|WRESTLING FOR FAIR PRICES|
Low domestic crude prices marred this winter the economics of Russian oil producers. Quite unexpectedly, similar problems dealt a major blow to Lukoil's joint venture in Kazakhstan, where domestic prices were this winter much higher. The commitment of the company's partners to develop export shipments, buying crude volumes below market prices from Lukoil's Kazakh-based JV Turgay Petroleum, resulted in suspension of Kumkol field operations.
|THAT'S WHAT FRIENDS ARE FOR|
Mounting concern over the passage of large numbers of oil tankers through Turkey's Bosporus straits was worsened by the late December 2004 decision of Croatia to ditch the Druzhba-Adria pipeline project. The need to continue the dialogue with Turkey about the terms of traffic through the straits forced Russia to revive diplomatic maneuvers involving Bulgaria and Greece.
|PIPELINE TO THE EAST|
On New Year's Eve, Russian Prime Minister Mikhail Fradkov made the specific present to the oil industry. On 31 December 2004 the head of Russian government approved the construction of Eastern Siberia–Pacific Ocean pipeline.
|LUKOIL DEVELOPS VYSOTSK|
Russian oil giant Lukoil launched on 23 December new rail bypass for crude and products shipments to its Vysotsk terminal on the Baltic sea. The new route will allow to boost the terminal throughput up to 5mn tpa. This is seen as yet another step in Lukoil's export strategy aimed to reduce the company's dependence on the pipeline monopoly Transneft systems.
|THE COMPROMISE IS INEVITABLE|
The growth of Caspian Pipeline Consortium shipments to nameplate capacity is forcing shareholders to consider expanding the system.
|UNDER PRESSURE OF LOSSES|
Russia's Alliance group faces dilemma — either to modernise its Kherson refinery in Ukraine or to ditch the unit
Controlled by Alliance oil company 173,000 b/d Kherson and 114,000 b/d Khabarovsk refineries are divided by both terrestrial and technological chasms. In early 2004, Khabarovsk refinery launched isomerisation unit; the Alliance Group and Korea's Samsung on 21 September 2004 signed an agreement on the refinery modernisation project, which secured the $500mn investment. Alliance talks about similar amount for Kherson refinery, but in this case had hardly spent a fraction of funds needed.
|THE UNNOTICED TSUNAMI|
within a year, the price of motor fuels jumped by a third
The last year was notoriously bad for the motorists — motor fuel prices hiked by 31.3%. What are the reasons of this trend, what are the causes of such explosive growth and why did it stop? The OilMarket tries to find the answers.
|GROWTH HARD TO SUSTAIN|
In 2004 oil companies of Russia and CIS exported 188.7mn t (3.76 mn b/d) of crude via Transneft system. This is a 18.2% increase on 2003 levels. In 2003 export shipments via Transneft systems exceeded 2002 indicators by 8.2%. Yet there is every reason to believe that the peak growth of export pipeline shipments will hardly be sustained in the foreseeable future.
|WITH THEIR OWN HANDS|
Those who on behalf of Rosneft purchased Yuganskneftegaz, the former main production arm of Yukos, have succeeded in relaunching exports. However, not all volumes are being sold without a hitch.
|PRIMORSK: A WEATHER BOUNTY|
A snap of mild weather in December 2004 — January 2005 brought a timely relief for crude exporters operating on Transneft's Primorsk terminal in the Gulf of Finland.
|Diversification before all?|
Naftogaz Ukrainy's intent to prolong shipments to Poland wholly fits in with the Polish strategy of developing supplies to its domestic market. However, the need for these supplies is linked neither to a lack of gas supplies and nor to a lack of offers.
|PILOTING THE UNDERTOWS OF BUSINESS|
Russian and other CIS oil companies nowadays are seeking novel approaches to management, with the aim of adapting the latest trends in business administration and development. Outsourcing logistics is an established tradition for companies engaged in the global oil industry, as it enables them to focus on core businesses, be those businesses upstream, downstream, in engineering, or in services. When it comes to outsourcing logistics in the CIS, however, the question is whether companies can navigate unique undercurrents and shoals.
|OIL FOR WHAT?|
There is a further development of the fraud scandal related to the Oil for Food programme (1993–2003), with the alleged involvement of United Nations Organization (UN) top leadership, its Secretary-General Kofi Annan and other high-ranking officials. The UN is accused of mismanaging the programme that allowed Saddam Hussein to pocket more than $21bn in 1993–2003.
|HELIOS — CLEAN POWER FROM THE SUN|
Despite a large number of successful refining modernisation projects targeting fuel quality issues, the Kazakh downstream sector still lacks the momentum enjoyed by the upstream segment of the industry. Kazakhs themselves are tired of toxins getting the best of the air they breathe — one study showed the average vehicle burns some 2 tonnes of gasoline every year while emitting up to 500kg of pollutants. But one industry player has placed its bets on cleaner fuel at the retail end and the country is feeling the rewards.