Copyright © 2002 The International
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To help the United States in its war on terrorism, Russia may build a deep-water port at Murmansk where it could load supertankers with plentiful Russian oil and ship it to America. The United States would be less vulnerable to disruptions in the oil supply from the Middle East, and Russia's oil barons would have a huge new market to cultivate. A year after the Sept. 11 terrorist attacks redefined U.S.-Russian relations, George W. Bush and Vladimir Putin are working to turn their new friendship into a tangible new partnership between the world's largest energy consumer and the steward of one of the world's largest energy reserves. Ignoring skeptics, the two presidents signed an energy cooperation agreement at their May summit meeting in Moscow, and the plan to convene a two-day oil and gas conference in Houston on Oct. 1. If they succeed, the partnership could be among the most far-reaching changes to the international order in the aftermath of Sept. 11. For the first time, Russia would provide significant economic goods to the United States, no longer playing the role of financial supplicant as it has since the demise of the Soviet Union. Closer energy ties would also further diminish U.S. dependence on oil from the Middle East and give Bush flexibility in confronting Iraq. "The United States wants to be prepared for some kind of disruption," said Konstantin Reznikov, the senior oil analyst at Alfa Bank in Moscow. "The relationship between the United States and the Middle East - and Saudi Arabia in particular - deteriorated after the September 11 events, so now they're targeting to get more crude oil from other regions." The U.S. energy secretary, Spencer Abraham, echoed that view during a recent visit to Moscow to promote cooperation. "Russia will play a pivotal role in ensuring global energy security," he said, adding that "the more diverse the sources of energy are, the less likely it is that disruption on one part of the planet will interrupt supplies." Some Russian oil executives estimate that Russia, which currently supplies virtually no oil to the United States, could soon provide as much as 1 million barrels a day, or nearly 10 percent of U.S. imports, replacing most of Saudi Arabia's supplies if necessary. Already, Russia has surpassed Saudi Arabia in oil production. No one is more enthusiastic about the prospect than Mikhail Khodorkovsky, head of Yukos, the second-largest Russian oil company. He figures that the United States could survive with its own oil reserves and Russian help. "Say a disruption from some Middle Eastern suppliers, say 1 million extra barrels a day from Russia, and the Strategic Petroleum Reserve, and America doesn't have anything to worry about for a year and a half," he said. "And in a year's time, Russia can increase its shipments by a million barrels a day." Khodorkovsky sent the first supertanker of oil directly from Russia to the United States this summer, followed by a second supertanker a month later and by a smaller, third ship last week. "America, here's a gift from Siberia!" trumpeted a Russian newspaper. But some oil executives and analysts dismissed the shipments as little more than public relations, asserting that the additional cost makes it a bad economic bet for Russian companies and outlining the myriad logistical difficulties of transporting oil halfway around the world from Siberia to the United States. "I'm not sure for Russian oil companies it makes economic sense at this point," said Stephen O'Sullivan, head of research at United Financial Group, a Moscow-based brokerage firm. "It's clear that America really wants Russian oil, but I'm not sure they're going to be that happy to pay an extra $1.25 per barrel." Simon Kukes, president of Tyumen Oil, the third-largest Russian oil company in Russia, believes the shipments to Houston have been important, but he figures it will take five years, not one, to reach an rate of 1 million barrels a day in exports to the United States. "We're making too much noise about Russia being a replacement for Saudi Arabia‚," he said. "In the nearest future, it's impossible." With the world's largest natural gas reserves, Russia has always been an energy powerhouse, but lately it has again become a dominant player in world oil markets, after years of decline.Russian oil production has risen since 1999, along with capital investment. Production reached 7.7 million barrels a day in August. Many believe production could rise to 9 or 10 million barrels a day within a few years. But while Saudi Arabia exports nearly all its oil, Russia sells less than 5 million barrels a day abroad, making it still by far the second-largest exporter. Moreover, Saudi Arabia has the capacity to produce an extra 3 million barrels a day with the flick of a switch, allowing it extraordinary market influence, while Russia is producing at full capacity. Copyright © 2002 The International Herald Tribune |