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OilMARKET 01 / 2006
TOPIC OF THE ISSUE
The controversy of gas warsThe controversy of gas wars
The confrontation of Russia and Ukraine, which started in the fall 2005 under the slogan of a campaign for market relations for Russia's export of natural gas, seemed to have finished with 4 January's signing of a trilateral agreement between Gazprom, Ukraine's state-run monopoly Naftogaz Ukrainy, and an obscure company RosUkrEnergo (RUE). However, setting up a JV between Ukraine's Naftogaz and RUE (the company designed to sell in Ukraine natural gas volumes supplied by Russia and Central Asia) proved longer and trickier than any of those concerned expected. Too much in this drawn-out conflict went wrong, or almost wrong compared to what gas sellers and buyers initially expected, culminating in multiple paradoxes, which resulted in new realities of energy security in Eastern Europe and in the EU.
PERSON OF THE ISSUE
MIKHAIL GUTSERIEV, THE PRESIDENT OF RUSSNEFTMIKHAIL GUTSERIEV, THE PRESIDENT OF RUSSNEFT
Mikhail Gutseriev became the first businessman who managed to create vertically-integrated oil company in Vladimir Putin era. While some would see such portrait as too abstract, the fact remains that in 1999 Gutseriev enlisted a powerful support for modernisation of state-owned Slavneft from then prime minister Putin. The oil tycoon managed to attract large investments and to convince Belarus authorities to start full-scaled upgrading programme for Mozyr refinery owned by Russo-Belarusian holding, in parallel launching modernisation of Slavneft's Yaroslavl refinery.
PHOTO OF THE ISSUE
The freezing pointThe freezing point
The Arctic cold weather engulfed this winter most of the European continent, stopping short of the Mediterranean. Such climate resulted in unprecedented temperature contrasts, which triggered atmospheric fronts with massive low pressure areas bringing freezing cold air from the continental Europe.
COMPANIES
VERTICAL INTEGRATION IN PUTINVERTICAL INTEGRATION IN PUTIN'S TIMES
Gutsetiev's oil company Russneft paved yet another way to vertical integration in Russia
In the 90-s vertically integrated companies in Russia were formed by the inking of a single paper on the desk of president Yeltsin. Mikhail Gutseriev registered his own oil company in September 2002, after leaving chair of the vertically integrated Slavneft. Even then, the oil tycoon stated that in the short term the business would propel itself onto the list of Russia's largest vertically integrated companies. His dream came true in late 2005 the company completed its production cycle by acquiring its own refining infrastructure. Total capacity of two refineries in Orsk and Krasnodar now reaches 200,000 b/d. Russneft's acquisition of TNK-BP assets enables Russneft to cure the chronic lack of refining facilities.
COMPANIES
LUKOIL 2006 PLANSLUKOIL 2006 PLANS
On 13 January Lukoil presented performance results for 9 months 2005. Following the presentation, the vice-president of Lukoil Leonid Fedun outlined the company's plans for 2006 as decided by Lukoil board of directors. Generally speaking, in 2006 the company will continue expanding its production, acquiring new assets both in Russia and abroad, and investing in downstream development.
COMPANIES
THE TAXMAN REMEMBERS YUKOSTHE TAXMAN REMEMBERS YUKOS
The fallen oil company is hit by another big tax bill
It seems Yukos is not going to be able to get out from under the Russian tax man's thumb. After record tax claims for 2000 to 2003, which Yukos itself calculates were about $27.5bn and which deprived it of its main income-producing asset Yuganskneftegaz, the company is once more facing big claims, this time for 2004. The tax authorities' re-awakened interest in Yukos shows the official Russia is not interested in the company paying off it debts and retaining the current make-up of shareholders.
DOMESTIC MARKET
Fuel market after lifting the lid on pricesFuel market after lifting the lid on prices
Russia's fuel prices on retail market peaked in the fall 2005. In 2004, prices on Russia's gasoline stations grew by 31% in 2005 by another 16%. The way out emerged on 19 September's meeting of minister of industry and energy with the heads of largest oil companies. Then, the oil industry professionals made a rather contradictory decision to freeze retail prices for gasoline till the end of the year. The moratorium expired on 1 January. The OilMarket approached market players and industry experts with one question: What do you think of price condition on Russia's retail market in the new year?
DOMESTIC MARKET
Corporate collusions on crude market must be countered with state measuresCorporate collusions on crude market must be countered with state measures
The review of Russia's oil industry key events in 2005 and legal forecast for 2006 offered by Mikhail Odintsov, chairman to the natural monopolies board of Russia's Federation Council, to the OilMarket readers.
TECHNOLOGY
BOOK REVIEWBOOK REVIEW
Oil Refining Technology. Part I. Primary Distillation
The book Crude Refining Technology. Part I. Primary Distillation., edited by Olga Glagoleva and Vladimir Kapustin, is published by Khimia Coloss publishers. The publication has been approved by Russia's ministry of education and science as a textbook for students reading Chemical Technology of Natural Energy Sources and Carbon Materials to major in Chemical Technology of Organics and Fuel. The book is a work of a team of authors lecturing at the department of crude refining technology at Russia's Gubkin State University of Oil and Gas.
EXPLORATION AND PRODUCTION
LOSING THE PACELOSING THE PACE
Russian crude production growth drops 75% in 2005
The engine behind Russia's economy, the oil and gas industry, cooled substantially in 2005. While the recent 2% annual decline in natural gas production is alarming but acceptable, the 75% drop in oil production in 2005 is shocking. Officials and top managers in the industry predict the trend will continue for the next few years, while admitting that 10% annual production growth rates are a thing of the past.
TRANSPORTATION
KAIRAT KRYMOV: WE ARE OPENING UP NEW OPPORTUNITIESKAIRAT KRYMOV: WE ARE OPENING UP NEW OPPORTUNITIES
The demanding year 2005 came to close with a strategic success for KazTransOil, Kazakh state-owned pipeline operator the company completed the strategic pipeline project Atasu-Alashankou, and started filling the line with technical crude. In 2006 the pipeline, which runs over three regions of Kazakhstan to a refinery in north-west China, will start its commercial operation. OilMarket enjoyed the opportunity to have a word with KazTransOil general director Kairat Krymov, who shared his views on last year's results and outlined the company's plans.
04 / 2018