YUKOS head on Russia's economic growth - 27 March, 2003

Russia's economy will stop growing at the cost of the oil sector in the first half of 2003, YUKOS head Mikhail Khodorkovsky declared at the conference "The Strategy of Russia". He declared that in 2002 revenues of the Russian oil sector amounted to $57bn, while different taxes amounted to $22bn, $15bn were production expenses, $9bn were transportation expenses and $10bn were capital investments.

Khodorkovsky believes that it is necessary to increase oil production from the current 380m tons to 500m tons per year, decrease transportation expenses (by 30 percent, in the event new oil pipelines are constructed) and launch new technologies. According to him, it is necessary to sell about 1bn tons of oil reserves per year at tenders. He thinks that in 2004 oil prices will return to their "normal levels" ($20-23 per barrel for Brent oil and $18-21 per barrel for Urals oil). At the same time, the Russian budget could lose about $6bn and the GDP about $15bn, if the proposed measures are not taken.