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OilMARKET 06 / 2003
TOPIC OF THE ISSUE
SMALL RAIN LAYS GREAT DUSTSMALL RAIN LAYS GREAT DUST
Why Russia shouldn't ditch the independent oil producers
It will be no stretch to call Tatarstan the hot bed of Russian independent oil producers. Here, where oilfield exploration started back in 1930s and oil production has over 60 years of history, the large number of small-time fields was ditched by vertically integrated oil companies in the past. Further servicing of worked-out oilfields is impossible without the implementation of new technologies, whilst the returns offered frequently fall below the level of interest for Russian oil giants. Since Russia has many fields of this category, positive exposure of Tatarstan could be useful in other regions as well.
INTERVIEW
Transneft: customers are waiting for our crudeTransneft: customers are waiting for our crude
Increasing oil exports is a priority of Russia's budget and state policy. Transneft the Russian pipeline operator has recently been expanding its export capacities at an unprecedented rate. These days the company is working on a number of projects when they are implemented, the customers will probably have to compete for the deliveries of Russian oil. Our correspondent spoke with Igor Solyarsky, Vice-President of Transneft, about the company's plans in the light of national priorities.
INTERVIEW
Uldis Pumpurs: we know that Russian exporters need VenstpilsUldis Pumpurs: we know that Russian exporters need Venstpils
The dashing development of Russian pipeline system, primarily its Primorsk direction, resulted in reduction and gradual suspension of shipments to Latvian marine terminal Ventspils Nafta. During the 1990s, Ventspils Nafta handled up to 20% of Russia's crude and oil products. Today the company is facing difficulties due to the decision of the Russian side to stop pipeline crude shipments to the terminal from January 2003.
INTERVIEW
How to survive and make money swimming in the pool with Russian oil business sharksHow to survive and make money swimming in the pool with Russian oil business sharks
Investing in the independent oil production in Russia is tricky business. However, there are many examples of successful investment cycle, from licence acquisition to lucrative sale of the company. OilMarket met with president of ZAAB group of companies, former CEO of Goloil independent oil producing company, Mr. Zamir Abdullaev. We discussed not only the matters of surviving in highly competitive market of Russian oil industry, but also the experience of profit making project.
INTERVIEW
Looking back over decade of troublesLooking back over decade of troubles
This autumn the Russian Association of small and medium-sized oil and gas producers (Assoneft) marked its 9th anniversary. OilMarket meets with Elena Korzun, Director General of Assoneft, who is speaking about the sector's history and current state of the industry.
EXPLORATION AND PRODUCTION
Bumpy growthBumpy growth
For 10 months 2003, Russia's output of crude reached 348.15 mn t, an 11% increase on corresponding 2002 period. Natural gas output for 10 month 2003 increased y.o.y. by 4.4% to 507.17 bn m3, in October 2003 the country produced 53.678 bn m3 of gas.
EXPLORATION AND PRODUCTION
The government purges PSAThe government purges PSA
The Government abolished in November a number of panels developing production share agreements (PSA) in petroleum industry.
EXPLORATION AND PRODUCTION
BELKAMNEFTBELKAMNEFT
The biggest among Russia's independents
These days an independent production of oil is becoming an increasingly popular subject in Russian printed media. It has been repeatedly noted that the independent oil companies often serve as major donors of their regional budgets. Belkamneft is a typical example of such company. Operating in rather close conditions of oil production in Kama river basin, this company has become the biggest independent producer in Russia.
FINANCES
Season of cheap moneySeason of cheap money
Lukoil received $750 mn underwritten credit from major banks On 27 October 2003, representatives of Lukoil and group of western banks signed documents giving green light to $750 mn syndicated credit for the company. The credit, secured on export contracts, will be executed in two trenches, $450 mn over 5 years with APR of LIBOR+2% and $300 mn over seven years with APR of LIBOR+2.5%.
EXPORTS
Kalmtek readies to enter CPCKalmtek readies to enter CPC
The Caspian Pipeline Consortium (CPC) and Russia's Kalmtek in Kalmykia autonomy on 20 November 2003 signed an oil shipping agreement to send crude via the CPC systems. To access the network, Kalmtek will use Russia's federal access quota.
POLITICS
Family silverFamily silver
Or genius of opportunism
When the industry witnessed a fusion of TNK and BP on the outset of 2003, it was thought to be the event of the year for Russian petroleum industry. However, the drama of reversed merger of Yukos and Sibneft heats the imagination of the public much more so than fairly technical Russo-British deal.
SAFETY
Highly explosive industryHighly explosive industry
Oil industry facilities worldwide remain most vulnerable to large explosions and fires. This is true even for one of the most industrialized countries in the world, such as Japan. Two big recent incidents, which happened in Japan in September and October this year, provide an eloquent illustration of aforesaid.
INVESTMENTS
LUKOIL decided how to lay out $25 bnLUKOIL decided how to lay out $25 bn
The board meeting of Lukoil on 21 November in Geneva approved the Program of strategic development of the company for 2004-2013. The ten-year program provides for the boost of carbohydrates output by 1.8 times, which would require estimated $25 bn of investment. Over the period, Lukoil intends to increase the production from the current 1.61 mn b/d to 2.8 mn b/d.
STRATEGY
The taste of KovyktaThe taste of Kovykta
Rusia Petroleum, Chinese National Petroleum Corporation (CNPC) and Korean Gas Corporation (Kogas) wrapped up a report on feasibility studies for Kovykta project in Moscow on 14 November 2003. The project will put online the largest in Eastern Siberia gas condensate field and connect it to Far East regions.
REFINING
Cinderella of Russian oil industry
The boost in refining volumes steady lags behind the production growth rate.
Stable growth of crude output in Russia (for 3 quarters 2003 oil production propped up by over 11%) continues to by and large outweight the advance of refining volumes of Russian refineries. Upstream production for 3 quarters 2003 y.o.y. rose by 11% (31 mn t) to 311 mn t, according to Victor Kristenko, vice-premier of Russia. In the same time, refining volumes edged up by mere 3% to 141.24 mn t.
REFINING
Not bad, but not enough...Not bad, but not enough...
Retarded refining technologies keep Russia in low league of refinery utilisation The name of Elizabeth Barrett is well-known by the professionals investing in petroleum industry of Russia and other post-Soviet countries. She has over quarter century experience consulting on petroleum industry, the last eight of these on the aspects of CIS countries. OilMarket talked to Elizabeth at the international conference on prospects of Russian refining industry in Berlin. The focus was on the ever growing need to boost investments in the refining sector, which for Russian companies is still overshadowed by massive underutilisation of capacity
MARKET
Ukrainian LPG market awaits investmentsUkrainian LPG market awaits investments
Ukraine, the country sized almost as big as Finland and Turkey with population 1.5 times bigger than Poland, remains a relatively small LPG market compared to those three countries. There are several reasons for that, whilst the key fact is that during the soviet era most of Ukraine's large cities, particularly the ones with population more than 1 mn, were provided with very efficient infrastructure for the natural gas supplies.
POWER GENERATION
Integration rushIntegration rush
Fusing of Russian electric power industry and oil sector gains momentum
Spread over the last year, market sweep of RAO UES and regional power operators (RPO) shares resulted in substantial alteration of energy holding equity structure. Some experts in earnest predict that it will also create fundamentally new type of energy company vertically integrated holdings, embracing both upstream and downstream sectors of energy production up to retail sales of electricity and heat energy to the consumers.
01 / 2019