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The Russian Federal Energy Agency squeals over the end of cheap oil

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  • papp20032000
    Some excerpts translated into English. The El Pais below link, might be encrypted. For those interested in the full article in Spanish language, please address
    Message 1 of 2 , Jul 11 4:03 AM
      Some excerpts translated into English. The El Pais below link, might
      be encrypted.

      For those interested in the full article in Spanish language, please
      address to


      Interview by Fernando Gualdoni to Serguei Oganesian. Director of the
      Russian Federal Energy Agency by El País. Spain.

      <http://www.elpais.es/articuloCompleto.html?xref= 040711elpepieco_3&type==Tes&anchor==elpporeco>

      "Government is not interested in Yukos being broken"
      Q. What levels should have oil for the investments to account for in
      this Russian sector?

      A. It is difficult to calculate the production costs of one ton of
      Russian oil. There are big differences in the climatic and economic
      conditions, efficiency and deposits potential, as well as in the
      state of the art of the companies. The crude itself its
      differentiated by its physical properties. Tha fact that the big
      oilfields are far from the main trunk pipelines, influences the
      costs. In reality, the oil business in Russia is several orders of
      magnitude more expensive than in the Arabian Peninsula. But there are
      still some wishing to invest in our sector, in the hydrocarbons
      sector in particular. There are 11 vertically integrated companies
      operating and a hundred small and medium producers, many of the in
      joint ventures. I would like to give some figures to better answer
      your question on investments. In 2003 the Russian oil companies
      invoiced 50 billion US$. After paying 25 billion in taxes, their net
      profit was a 35.7% last year. The companies reinvested some 5
      billion and some 20 billion remained for credit paybacks,
      shareholders, etc.

      Q. Russia is already producing more than 9 million barrels a day.
      What is the upper limit of your country?

      A. In the first four months of 2004, the crude production rose in
      14.2 million tons, with respect to the same period last year. In
      2004, the Russian oil sector will grow between a 7 and 8%. The crude
      production in Russia will change as a function of the socio-
      economical scenarios in the country. In the optimist scenario, in
      2010 the oil production in Russia will be of 490 million tons and in
      2020 will reach 520 million tons.

      Q. How much oil is exported?

      A. In 2003 the crude exports were growing faster than production and
      were 228.5 million tons. Crude sales gave to the Russian companies
      benefits for 38.8 billion US dollars. As per our forecast, in 2004,
      Russia will export 251 million tons of crude and in 2005, from 249 to
      262 million tons.

      Q. How do you think will evolve the prices of crude oil in the short
      and medium term?

      A. There are various factors explaining the high levels of crude in
      this moment. Apart from the increase in the demand, speculation and
      the violence in the Middle East, I would like to mention a couple
      more. First: in the world, the situation of the proven reserves is
      started to be questioned. The most recent estimates point that they
      will deplete between 35 or 40 years from now. Although data can be
      objected, because there are more than a dozen of methodologies to
      calculate reserves, the figures are far from being nonsensical. The
      proven reserves of crude oil are being exhausted. Second: We are
      aware that it is very unlikely that Russia will have new discoveries
      of big oilfields. And the development of the ones already operative
      is more and more difficult and costly, as they are in the polar seas.
      Besides, they are very far from the trunk pipelines. The production
      and transport of oil is every day more difficult and expensive. Due
      to this, I believe Humanity must accustom to live with an expensive
      oil, to treat hydrocarbons as a non renewable resource and to look
      for alternative energy sources. It seems that oil is not going to be


      The Russian director confesses partially. He still talks "business as
      usual" and expects his country to grow 7-8% annually (optimistic
      scenario), in which case, the exports may decline, even the local
      production is still set to increase –nobody knows for how long-, but
      then expects that people will treat oil as a non renewable resource.
      He explains and admits that there is oil for 35-40 years, but does
      not explain that this is "at current production levels" and
      that "current production levels" can not be sustained if the Hubbert
      curve is right. He admits his oil is several times more expensive
      than the one in the Gulf. And answering about the concern for the
      foreign investors, he goes in an ellipsis and says they won 35.7%,
      after taxes, in one year, which is substantially more than what my
      bank pays to me or my salary increase or my pension. Clever guy. They
      start confessing, but still keep their "business as usual" face. We
      will see for how long.

      Pedro from Madrid
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