Russian Economy in 2002. Oil Expansion: Jump to Nowhere

The rise of the international oil prices and the chase of Russian companies for petrodollars have resulted in the severest crisis in Russia’s fuel and energy complex. Production and export of oil are rapidly increasing; the relations with NATO are getting more complicated. The organization of oil exporters even threatens Russia with a price war for the strikebreaking. As it turns out at the same time, Russia’s oil and gas supplies that are of easy access will be enough just for a few years. The equipment employed at the oil and gas complex is worn out and urgently needs modernization. It means that the Russian fuel and energy complex needs investments at the rate of several billions.

For a short period of time, Russia has been ahead of Saudi Arabia in oil production. Russia is obsessed with the idea to press Arab oil on the American market. It’s a sensation! Russia’s oil company Yukos delivers two tankers of Russian oil to the USA. There are grand plans concerning construction of a large oil-loading terminal in the Russian city of Murmansk. Preparations for the Russian-American oil summit in Houston were pompous. And results of the summit brought just unjustified hopes. 

The US authorities support intensification of cooperation with Russia in the energy sphere, however, American banks and companies won’t invest in the Russian fuel and energy complex. At least, they won’t do it on the scale that might have a significant economic effect.

On the whole, the USA uses the cooperation with Russia in the energy sphere only for the sake of propaganda, in order to strengthen the pressure exerted upon OPEC and on the Arab world. Americans will welcome Russian oil only in case if we produce and deliver it right to their country. But this would be unprofitable for Russian oil companies. So, the situation has become an exclusive circle.

Russian oil companies are actively searching an outlet to the foreign markets. Some of them even try to purchase oil refining capacities abroad. Yukos begins preparation for construction of an oil pipeline to China, but the problem is still delayed on the “top level.” Iraq’s authorities debar the Russian oil company LUKOIL from development of the West Qurna oil field. As a result, Russian oil companies are on the brink of a real competitive struggle for Russian oil fields that are not yet divided. 

At the end of the previous year, an abrupt reduction of the export of Russian oil resulted in overstocking of oil products on the domestic market. This fact was acknowledged by the RF Minister of Energy, Igor Yusufov at a collegium of the Ministry.

Dmitry Slobodanuk

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Author`s name Michael Simpson