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Tokyo outbids China in Kremlin oil
link
By John Helmer
MOSCOW -
The Kremlin has decided to curtail its support for a new
pipeline proposed for oil shipments to China, and
according to Moscow industry sources the Russian
government is now quietly in favor of a more expensive
option backed by the Japanese government.
At
present, Russian law gives the state strict control over
every ton of exported crude oil and petroleum products
through regulation over access to oil pipelines, tariff
pricing for pipeline and rail transportation, port
control, and customs inspection and export taxation.
Oil industry sources in Moscow told Asia Times
Online that negotiations between Yukos, Russia's largest
oil producer, and the China National Petroleum
Corporation (CNPC) failed in Beijing last month, because
the Russian government has gone cold on the plan to
build a US$1.8 billion line between the Siberian town of
Angarsk and the northern Chinese terminal center of
Daqing. Half of the financing for the project has been
pledged by CNPC.
No public word of the shift in
Russian policy has leaked as yet, as the strategic
implications, following months of high-level official
endorsements of the project from both Russian and
Chinese leaders, have yet to be estimated.
The
change in official thinking in Moscow has been
stimulated, the sources believe, by Transneft, the
state-owned pipeline operator, which argues that it is
unwise for the Russian government to commit new pipeline
capacity to single destinations, like China or the US.
Until now, the government has been publicly backing
Yukos and CNPC in their plan to construct the southward
export line.
Industry sources in Moscow confirm
the shift in government thinking has been encouraged by
a Japanese offer, rivaling the Chinese, to finance the
$4 billion cost of building the new Siberian pipeline
eastwards to the port of Nakhodka. This route is favored
by Transneft, which argues that, although more than
double the cost of the Yukos-CNPC proposal, it would
give Russian oil access to the entire Pacific and Asian
market.
Intense lobbying by Yukos to neutralize
the Transneft-Japan bid can be expected in the coming
weeks. If Transneft has managed to convince the Kremlin
to change its mind on its Asian oil marketing strategy,
it is also likely to put in doubt the plan of the four
Russian oil majors who signed an agreement last month to
build a new oil terminal at Murmansk, Russia’s Arctic
port.
"If the oil companies have the money for
the project, let them build it," Sergei Grigoriev,
vice-president of Transneft, told Asia Times Online
regarding the Murmansk project. "However, we doubt that
they will build a pipeline cheaper and better than
Transneft can." Transneft has voiced its opposition to
the Murmansk terminal plan before, arguing that
Primorsk, on the Gulf of Finland, is better positioned
to supply European oil markets. Transneft is busy
expanding pipeline capacity to expand Primorsk's
shipping volume by laying additional pipeline delivery
capacity to the port.
According to Grigoriev,
"The proposal to build a pipeline to Murmansk doesn't
compete with the plan for expansion of Primorsk, because
Pirmorsk is oriented towards deliveries of oil to
Europe, while the Murmansk project is aimed at the
United States. No tankers go from Primorsk to the United
States." Transneft has expressed skepticism before that
a consortium of Yukos, LUKoil, Sibneft and Tyumen Oil
Company will be able to develop a big enough market in
the US to make Murmansk shipments by very large crude
carriers economically feasible. "I'm sure that the oil
companies can count their own money," Grigoriev said.
"While they are optimistic about the project now, they
may later change their minds when they realize what it
will cost."
Grigoriev added that it is up to the
Russian government to decide where scarce investment
resources on expanded oil export infrastructure should
be built. Industry analysts in Moscow believe that the
memorandum of understanding, signed with a blaze of
publicity in December, is an attempt by the oil majors
to lobby the Kremlin. Negotiations with Surgutneftegaz
and other oil producers are under way to expand the
Murmansk consortium.
However, according to
Sergei Lukyanov, director of Petroleum Argus in Moscow,
"The main question here is how influential Transneft
will be in this project. The role of Transneft in this
respect is great, as oil companies do not have
experience, technical means and resources to operate
pipelines by themselves. The Murmansk project is also a
matter of relations between the state and the oil
companies. Judging by the sum of investment necessary
for the Murmansk project - up to $5 billion - it can be
considered a project of state importance, and most
likely it will be the state that will pronounce its
judgment on the reasonableness and the necessity of this
project. So the oil companies are likely to use their
lobbying capacities in order to persuade the state to
support this project. The oil companies dream of doing
away with the strong monopoly of Transneft and having a
'free' oil export hand."
According to Lukyanov,
"The project for construction of a pipeline to Murmansk
and an oil terminal there for 50 to million tons of oil
undermines Transneft's project for expansion of the oil
terminal in Primorsk up to 50 million tons. I'm sure
that Transneft will defend its project in Primorsk, and
even if it agrees to the role of operator of the
pipeline to Murmansk, it is likely that it will not
assist the Murmansk project. At maximum it will act
against it."
He estimates that Transneft has
"enormous lobbying capacities" that will be used to
argue against any diminution of state control over oil
exports, even if the Murmansk project adds no more than
10 percent to Russia's foreseeable oil export capacity.
(©2003 Asia Times Online Co, Ltd. All rights
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