Libmonster ID: U.S.-1234
Author(s) of the publication: A. KARPUSHIN

HOW TO BUILD OUR RELATIONS WITH THE MOST INFLUENTIAL INTERNATIONAL ECONOMIC ORGANIZATION

Alexander KARPUSHIN, Head of Rosneft's Representative Office in Europe (Vienna)

In two years, the Organization of the Petroleum Exporting Countries (OPEC), the most influential international economic organization in the modern world, will celebrate its 50th anniversary. Its name is associated with important changes in the global oil market; it remains and, apparently, will remain for a long time the most important "energy carrier" for all mankind. OPEC's influence is not limited to the oil industry, as the dynamics of supply and demand for oil and petroleum products have a huge impact on almost all commodity markets. The contribution of OPEC member countries to global natural gas supplies is growing.

For Russia, which is one of the world's leading energy powers, OPEC is both the closest ally, given the unity of interests in the implementation of export policy, and at the same time a competitor from which our country is forced to defend itself in order to maintain its position in the world market. Building proper, economically and politically sound relations with OPEC is one of the most important tasks of Russian diplomacy in the early twenty-first century. How is it solved?

OPEC was established in September 1960 in Baghdad at a conference convened by five countries-Iran, Iraq, Kuwait, Saudi Arabia and Venezuela. This was a time when the oil market was almost completely controlled by an International oil cartel formed by the world's largest oil corporations. At that time, few people could have imagined that OPEC would sharply limit the power of the all - powerful cartel in a few years, and then successfully encroach on the regulation of the world oil market and at the same time on the monopoly of the Western world on the right to dispose of oil reserves in its own interests.

Of course, OPEC has benefited from the fact that in recent years demand for the main energy carrier has unexpectedly exceeded supply, which has led to an unprecedented increase in prices for it, as well as increased the import dependence of countries deprived of their own reserves of liquid fuel. Hence the strengthening of the political and economic position of OPEC, the main supplier of oil on a global scale, as well as the rapid growth of the importance of Russian supplies, which act as a natural stabilizer of the shaken balance between supply and demand for oil and petroleum products on the world market.

COMPETITOR AND ALLY-ALL ROLLED INTO ONE

In this regard, it is extremely timely to analyze the current situation and prospects for OPEC development in order to adjust Russia's policy on the foreign economic front in everything related to oil and gas in order to preserve and strengthen its competitiveness in the market of these goods and maintain its position as the world's largest producer and exporter. Our country is simply doomed to find ways to cooperate with OPEC, including in all sorts of difficult situations and intricacies of market conditions, as well as taking into account the relations of the Russian Federation with all the member countries of this organization.

By the way, they are now not 5, but 13: Iran, Iraq, Kuwait, Saudi Arabia, Venezuela, Qatar, Indonesia, Libya, the United Arab Emirates (UAE), Algeria, Nigeria and Angola; at the end of 2007, Ecuador announced its desire to restore OPEC membership. These countries cover a total area of 13.5 million square kilometers, where 571.5 million people lived in 2006. Representatives of five OPEC member states-Algeria, Indonesia, Iran, Nigeria and Qatar-entered the Gas Exporting Countries Forum, dubbed "Gas OPEC". This informal organization also includes Russia. As of the end of 2006, OPEC member countries held 77.2% of the world's reliable oil reserves ($125.2 billion). t) and 49.3% -natural gas (89.1 trillion cubic meters). m) 1 (see tables 1 and 2).

Currently, these countries pay extremely high attention to building up their oil and natural gas reserves at a faster pace than the global indicators, considering this task as a sure way to strengthen their positions in the competition with independent exporters from the cartel-Russia, Norway, Mexico, Azerbaijan, etc.-

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Table 1

OPEC's share of the world's reliable oil and natural gas reserves (1970-2006)

 

Reliable oil reserves (billion tons)

Reliable natural gas reserves (TCM)

1970

1985

2006

1970

1985

2006

The world at large

74,8

104,2

162,2

44,5

101,2

180,9

OPEC

54,5

73,1

125,2

15,8

39,5

89,1

OPEC (%)

72,8

70,2

77,2

35,5

39,0

49,3



Source: OPEC Annual Statistical Bulletin, 2006. Vienna, 2007, p. 18-20.

Russia, Kazakhstan and other countries. And, I must say, they manage to do it. If in the period 1995 - 2006 world oil reserves increased by 1.2 times, respectively, then in OPEC countries they increased by 1.5 times. The organization continues to dominate in the world's forecast reserves of raw hydrocarbons.

OPEC is strengthening its position not only in controlling oil and gas reserves, but also in their production, processing, transportation and export. As of early 2007, the cartel accounted for 44.5% of global oil production and 17.8% of gas production (see table 3). Modern OPEC comprises 10.6% of the world's oil refining capacity, 11.2% of the world's oil products production, 53.6% of the world's oil exports, 21.7% of the world's oil products exports and 22.2% of the world's natural gas exports, 6.3% of the world's tanker fleet tonnage, and 20.5% of the tonnage of ships carrying liquefied gas2.

The World Energy Agency (IEA), which unites the countries of the Organization for Economic Cooperation and Development (OECD), predicts that by 2030 OPEC will not only maintain, but even increase its share in the global oil market, providing 52% of its global production in 20303.

Russia is definitely OPEC's number 1 competitor on the global hydrocarbon market. Of all the countries of the alliance in terms of oil exports, only Saudi Arabia is ahead of it. The Russian Federation accounts for 11.6% of world oil exports, and it ranks first in terms of gas exports - 23% of world exports (2005) 4.

At first glance, due to the commonality of many interests, relations between the USSR and then Russia with OPEC should have been generally favorable and rather close. After all, both sides of the global oil and gas production complex pursue similar goals. The first is to increase the profitability of hydrocarbon exports in order to successfully solve the socio-economic problems of their countries. And the second is to influence the movement of world oil prices in order to achieve a certain balance-the profitability of these prices for both oil exporters and importers. Nevertheless, these relations remained rather cool for many years: the USSR and then the Russian Federation saw OPEC only as the main competitor, aiming to weaken our country's position in the oil and petroleum products market. For this reason, we maintained only working contacts with the organization; if any agreed decisions were made, it was mainly done on a secret basis, through bilateral negotiations with individual OPEC member countries.

The situation began to gradually change only in the late 90s of the last century: Russia and OPEC almost simultaneously came to the conclusion that it is much more profitable for them to cooperate than to compete. In 1998, Russia was invited for the first time to the regular OPEC Conference as an observer, where it also announced for the first time a reduction in its exports of oil and petroleum products, thereby supporting the organization's efforts to implement its pricing policy. Then participation in the sessions of the Conference, as well as in meetings of OPEC experts with representatives of non-member countries, became regular.

Participation in the 132nd OPEC Conference in September 2004 was particularly important for Russia and OPEC. Speaking at the conference, the Russian delegate for the first time very clearly described our country's policy towards OPEC, saying that this policy is part of Russia's consistent and unchanging course to deepen constructive interaction both with all OPEC member countries and with the organization as a whole.5 Participation in OPEC events, the representative of Russia said, provides an opportunity to conduct a substantive dialogue with the heads of oil and energy departments of those countries that are the main producers of oil and gas raw materials and can have a significant impact on the dynamics of world prices for it. Thanks to the joint efforts and coordinated steps of OPEC and Russia, it was possible to keep prices on the world oil market at a level acceptable to both its producers and consumers for a long time.

Two joint seminars, held in Vienna in 2003 and in Moscow in 2004, were important steps towards establishing friendly relations between OPEC and Russia. At the first stage, the prospects for the development of the oil industry and the global oil market were discussed, and at the second, the problems of energy security and climate change in the XXI century were discussed.

The line of maintaining and deepening ties with OPEC continues successfully. At the 148th OPEC Conference held in Vienna on March 5, 2008, Russian delegate A. B. Yanovsky stated:: "This year marks exactly 10 years since Russia began to regularly participate in OPEC events as an observer. We believe that our cooperation is fruitful and has a positive impact on the situation on world oil markets, thereby strengthening global energy security." In conclusion, A. B. Yanovsky said: "Russia remains open to developing and deepening the energy dialogue both with individual countries in a bilateral format and with leading international organizations-

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organizations, in particular with OPEC. Such cooperation is envisaged, is being implemented and will continue to be implemented in accordance with our energy policy."

A visit to Moscow by an OPEC delegation led by its President, Ahmad al-Sabah, in December 2005, also contributed to the establishment of closer relations.Issues on Russia's ability to represent OPEC's interests at the G-8 talks in 2006, as well as prospects for more effective exchange of information in the interests of stabilizing the oil market, were discussed. 6 The parties agreed to hold annual meetings at the ministerial level. It is noteworthy that in March 2006, not only the ministers of the five most dynamically developing economies - China, India, Mexico, Brazil and South Africa-were invited to the meeting of the Group of Eight energy Ministers in Moscow, but also representatives of OPEC, by the way, who took part in such a forum for the first time.

In early March 2008, on the eve of the regular session of OPEC member countries in Vienna, OPEC President and Algerian Energy Minister Shakib Khalil invited Russia to join OPEC 7.

Thus, in recent years, significant progress has been made in establishing stable business relations between the Russian Federation and OPEC. However, we should not forget other times when OPEC leaders publicly threatened to declare a price war on Russia. Back in 2002, former OPEC President R. Lukman stated:: "The Russians would be fools to think that we will continue to reduce our market share in order to provide them with an increase in their own exports. It doesn't make sense for us to maintain high prices for someone to ride out on our back. We know what their production costs are, and if it comes to competition, we know who will win. " 8

It is interesting to note that there are different opinions regarding Russia's contacts with OPEC, even among domestic experts. I have heard people say that these contacts could have been more "capital", up to the conclusion of some fundamental, mutually binding agreement or even Russia's entry into this organization. According to the author's deep conviction, neither one nor the other should be done in any case. Russia should go its own way, avoiding strict quotas for oil production and exports, based on its own interests and taking into account the inevitable large political and economic losses from participating in the global oil cartel.

IF YOU WANT TO COOPERATE, HOW AND WHY

At the same time, it is appropriate to ask the question: can our relations with OPEC be considered optimal, do they need further improvement and improvement? The answer is obvious: without a doubt! There are many areas of cooperation that have not yet been "mastered", which can bring huge economic benefits to both Russia and OPEC member countries. I will mention some of them.

Both Russia and the OPEC countries have accumulated vast experience in improving the efficiency of both the oil-producing and related industries-oil refining, petrochemical, electric power, as well as in the operation of port facilities, tank farms, construction and maintenance of pipelines, etc. However, the mutual exchange of this experience has not yet been developed, which does not allow us to fully and effectively use the potential of the relevant industries.

I believe that it is time to establish a mutual exchange of experience in a broader-general economic-plan. This primarily applies to the ability to effectively use petrodollars. It is not without regret that we have to admit that for a number of parameters of the economy, -

Table 2

Reliable oil and natural gas reserves (billion tons, trillion cubic meters) m) OPEC member countries (1970-2006)

OPEC member countries

Reliable oil reserves (billion tons)

Reliable natural gas reserves (TCM)

1970

1985

2006

1970

1985

2006

Algeria

1,1

1,2

1,7

3,9

3,3

4,5

Angola

 

0,2

1,2

...

0,05

0,3

Indonesia

1,4

1,4

0,6

0,14

2,0

2,7

Iran

8,1

8,0

18,8

6,06

14,0

26,8

Iraq

4,3

8,9

15,6

0,61

0,8

3,2

Kuwait

10,9

12,6

13,8

1,19

1,0

1,6

Libya

3,8

2,9

5,6

0,85

0,6

1,4

Nigeria

1,3

2,3

4,9

0,17

1,3

5,2

Qatar

0,6

0,6

2,1

0,2

4,4

25,6

Saudi Arabia

19,3

23,4

35,8

1,6

4,0

7,1

United Arab Emirates

1,7

4,5

13,3

0,29

5,4

6,0

Venezuela

1,9

7,3

11,8

0,765

2,6

4,7

Total

54,4

73,3

125,2

15,8

39,5

89,1



Source: OPEC Annual Statistical Bulletin, 2006. Vienna, 2007, p. 17-21.

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OPEC member states are more efficient than the Russian economy. And this directly relates to how and where to direct the growing export revenue.

In passing, we note that Russia ended 2007 with an inflation rate of 11.9% and a total public debt of 33% of GDP, which is very high. This debt consists mainly of borrowings from state-owned companies and state-owned banks.9 Formally, these debts are not state-owned, but in case of an unfavorable development of events, the treasury will have to answer for them. The experience of individual OPEC countries in terms of rapid export diversification of both fuel and energy products and products of other industries is also interesting. It is also necessary to pay attention to the methods of managing the oil and gas industries in the conditions of full state monopoly, which is carried out in a number of OPEC member countries.

As you know, Russia has a well-developed industry-fuel and energy engineering, and is also able to produce many materials and provide services used in the fuel and energy sector. Russia could sell the products of these industries to the cartel countries on preferential terms, giving them in return (of course, also on preferential terms) its huge market for the products of the rapidly developing industries of these countries. It is also known that some OPEC countries have significant capital surpluses. Thus, only one of the Arab Emirates - Abu Dhabi, a member of the United Arab Emirates-has invested between $ 300 and $ 600 billion in the economies of Western countries in recent years. 10 I believe that Russia could also become a very attractive object for investing surplus "petrodollars" - you just need to think about how to interest their owners in this and where to go. direct these streams.

It would not be harmful to study the experience of individual OPEC countries in terms of creating new sectors of the economy and its structural adjustment. So, in Dubai, the production of aluminum, which is a very energy-intensive material, has been established. The production capacity of the aluminum plant is 750 thousand tons per year, which gives the UAE the 4th place in the world in the production of this metal11. It is planned to double these capacities, which will make the UAE a leader in the global aluminum industry. The country's next step is to accelerate the development of the aviation industry and related infrastructure; the Emirate is investing billions of dollars for this purpose. In a historically short period of time, OPEC countries managed to acquire their own specialized fleet for the transportation of oil, petroleum products and gas.

The disparity of oil production regions and places of its consumption creates certain problems for both Russia and OPEC member countries. The solution to the problem can be made easier by performing foreign trade operations in the so - called "swap" mode (from the English swop - exchange, swap places.-A. K.). For example, when transporting oil from the Middle East to Eastern European countries, the sending countries have to bear large transport and other unproductive costs. But it is possible to agree that this oil should come from Russia, and at the same time part of Russian supplies should be carried out at the expense of Middle Eastern oil. Especially great prospects for joint work between Russia and OPEC countries under the "swap" scheme will open up after the completion of the construction of the Russian oil pipeline "Eastern Siberia - Pacific Ocean" in the direction of China, Japan, the Republic of Korea and other countries located far from the main member states of the alliance.

So far, Russian business shows little initiative in establishing multilateral and effective relations with OPEC member states, as evidenced by the extremely low share of these countries in our foreign trade. At the same time, the main part of the trade turnover is accounted for by Russian exports. Thus, in 2006, the trade turnover between Russia and OPEC countries amounted to $ 5.2 billion, including Russian exports - $ 4.3 billion. and imports - $ 0.9 billion, which is comparable to Russia's trade with Spain. Russia's exports to the cartel countries are estimated at only 1.7% of our country's total exports.

The lack of a contractual framework in the form of bilateral agreements with a number of OPEC member countries on the promotion and mutual protection of investments, double taxation treaties, and bilateral trade agreements also negatively affects the development of investment and trade cooperation. Mutual trade also suffers from the fact that both Russia and most OPEC countries are not WTO members.

KUWAIT AND QATAR: STILL AHEAD

Russia's economic relations with OPEC member countries are extremely uneven. With Kuwait and Qatar, we can say that there are no trade relations at all - you can not take seriously the foreign trade turnover totaling only $ 10 million. in trade with Kuwait or 2 million - with Qatar. Several years ago, Sibneft participated in one of the major projects on the territory of this country, but due to the military operations that unfolded in neighboring Iraq and the difficult military and political situation in the region, the project was suspended.

It can be assumed that as the situation in the Middle East stabilizes, mutually beneficial cooperation between this state and Russia will noticeably intensify. Kuwait is an OPEC member state, which in 1994 concluded an interstate agreement with Russia on the promotion and mutual protection of investment, guaranteeing the application of national or most-favored-nation treatment to investors, depending on which one is most acceptable. In addition, the agreement established certain legal norms that promote the inflow of investments and guarantee their protection.

Russian companies have not yet managed to establish cooperation in the oil and gas sector and with Qatar's business structures. Although the latter are discussing the possibility of our participation in projects in the national oil and gas industry with Russian companies Gazprom, Stroytransgaz, LUKOIL, Modulneftegazomplekt.

ARE THEY WAITING FOR RUSSIA IN ALGERIA AND LIBYA?

Of the African OPEC members, Russia supports ak-

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relations with Algeria, Libya and Angola. In the course of Soviet-Algerian foreign economic cooperation, which dates back to 1962, 70 joint projects were implemented, including the construction of an oil pipeline with a length of more than 650 km, as well as the development and modernization of a number of oil and gas fields, which significantly strengthened Algeria's export potential.

Stroytransgaz recently completed the construction of the Haud al-Hamra - Arzew gas pipeline with a length of 403 km and won a tender for the construction of another gas pipeline - Hajret al-Nus Suger with a length of 273 km. Rosneft, in cooperation with Stroytransgaz, conducts exploration for oil and gas in the south of the country; they have already discovered two fairly large fields. Soyuzneftegaz is negotiating the introduction of the latest Russian technologies in Algeria in the field of oil and gas production, increasing the return and rehabilitation of wells, as well as the construction of pipelines and geological exploration. Other Russian oil and gas companies are also persistently knocking on Algeria's door 12.

At the same time, it should be noted that in 2007 the Algerian state-owned company Sonatrak announced the termination of the agreement with Gazprom signed in August 2006, which provided for the exchange of assets in the field of exploration and production, the creation of joint ventures, participation in tenders and ensuring broad cooperation in the liquefied gas market13.

The USSR and then Russia have long been cooperating with OPEC member Libya in various fields, including the oil and gas industry. Even at the initial stage of this cooperation, with the participation of Soviet specialists, a number of gas pipelines were built here, about 130 oil wells were drilled, and long-term schemes for the development of the gas industry were developed.14

Then, for certain reasons, our business contacts were interrupted for some time, and after the lifting of 18-year-old economic sanctions against Libya in April 2004, the effect of Russian-Libyan agreements and projects began to gradually recover. In 2000, an intergovernmental agreement on cooperation in the oil and gas industry and energy entered into force, and a bilateral project for the construction of the Homs-Tripoli gas pipeline is being implemented.

Among Russian companies, LUKOIL is particularly interested in Libya, as it has maintained contacts with the National Oil Company (NOC) since 1995 and regularly participates in meetings of the Russian-Libyan intergovernmental commission on trade, economic, scientific and technical cooperation. It cooperates with NOC and Tatneft, which opened its branch in Tripoli.

Since 2004, Libya has announced several international tenders for the development of its hydrocarbon resources. The winners of the first round for the development of 15 oil and gas blocks were the largest companies in the USA, Australia, Brazil, India and Algeria. Today, Russia is also trying to return to this country. However, in the new conditions, it is extremely difficult to do this because of the fierce competition that has developed, in which, in addition to the above - mentioned states, EU member states, as well as China, take part. This is not surprising, since Libya has the largest proven deposits in Africa, while 60% of the country's territory has not yet been explored for oil and gas15. Nevertheless, in 2005, the Russian Tatneft managed to win a tender for the development of an oil field near the town of Gal-damesa 16.

Gazprom won several tenders in 2006 and 2007. In 2006, it acquired the right to explore and develop a block on the Mediterranean shelf with gas reserves comparable to the Yuzhno-Russkoye field, and in December 2007, it acquired the right to develop one of the most promising oil and gas blocks in Libya, for which the company expects to invest more than $ 100 million. 17

Nigeria, a major African OPEC member, remains virtually undeveloped by Russian oil and gas companies and foreign trade organizations. The reason is risk factors that negatively affect the development of the country's oil and gas resources and attract investment. This country frightens investors from many countries, including Russia, with its exceptional corruption, high level of nationalist sentiment and relatively wide scale of the rebel movement. Nevertheless, Gazprom hopes to receive a multibillion-dollar contract for natural gas exploration in 200818.

In Angola, the youngest OPEC member, Russian interests are represented by Zarubezhneft, which conducts geological exploration in the country19.

WILL IRAN BECOME A GREAT GAS POWER?

As for the OPEC member countries, cooperation with which in the oil and gas industry is developing most successfully, here first of all it is necessary to name Iran. This country accounted for 40% of the total trade turnover between Russia and OPEC member countries in 2006. In the same year, Russian exports to Iran were estimated at $ 1.9 billion and consisted mainly of ferrous metals and products made from them, equipment for nuclear power plants, and fuel and energy group goods; Russian imports were valued at $ 238 million and included construction materials, food products, etc. Characteristically, the Republic of Korea, Italy, China, France and Germany ahead of Russia for the export of their goods to Iran.

Iran ranks second in the world after Russia in terms of gas reserves and is in dire need of rapid development of its fields. Therefore, investment cooperation between our country and Iran is developing mainly in this sector (not counting Russia's participation in the construction of the well-known Bushehr nuclear power plant). Gazprom is involved in the development of the second and third blocks of the South Pars field, located in the Persian Gulf. Gas reserves in the North and South Pars fields are estimated at 12-13 trillion cubic meters.

The agreement on the development of the field was signed in September 1997, and its participants were the National Iranian Oil Company (NIOC), on the one hand, and on the other - the French-Belgian company Totalfinaelf (with 40% participation), the Malaysian Petro-

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us (30%) and Gazprom (30%). Gazprom accounts for a third of the total investment volume. The recoverable reserves of the field are estimated at 8 trillion cubic meters. m. In 2006, the development of the field was completed, and the parties began to carry out mutual settlements. There is a gas pipeline project that will connect the South Pars field with India and Pakistan, which is especially important to meet the rapidly growing demand for gas in these countries.

Gazprom's second major project in Iran is the construction of the Iran-Armenia gas pipeline with a length of 140 km in accordance with the Armenian-Iranian agreement of 2001.

In the summer of 2005, the Russian-Iranian protocol was signed, which defines the main directions for expanding cooperation between the two countries in the gas industry. The most important ones are: search for geological structures and creation of underground gas storage facilities in Iran; development of a general scheme for gas supply to Iran, development of the country's gas transportation scheme, as well as determining the possibility of Gazprom's participation in the implementation of pipeline projects in Iran; transfer of Gazprom's experience in organizing dispatching services to the Iranian side; identification of opportunities for the use of gas in Iran as a motor fuel.

Significant interests in Iran are also held by Russia's LUKOIL, which, together with Norway's Norsk Hydro, is conducting geological exploration at the Anaran oil field in western Iran; the corresponding contract for service and exploration works covering an area of 3,500 square kilometers came into force in September 2003. Lukoil's share in this project is 25%. Recoverable resources here are estimated at 900 million tons. 20 bbl

In 2007, Lukoil and Norsk Hydro were forced to freeze the development of the Anaran field due to US sanctions against Iran, which threatened to extend these sanctions to their investments in the United States21.

Tatneft operates very successfully in Iran. It has carried out a large complex of drilling operations in the Kupal oil field in the south-west of the country, and has reconstructed a number of wells belonging to the Southern Oil Company of Iran. In 2005, representatives of Tatneft agreed with the Iranian Mostafan Foundation to establish a joint venture to conduct exploration and drilling operations for oil and gas, build infrastructure facilities, and provide engineering services in the oil and petrochemical sectors of the Iranian industry.

The activities of Russian oil and gas companies in Iran are not similar to their work in most other countries due to the presence of a monopoly of the state-owned company NIOC in this country, as a result of which foreign investors, in addition to the usual agreements, must also conclude so-called compensation contracts, which somewhat complicates the contractual process. However, our entrepreneurs have learned to overcome these difficulties, and in general, their activities in Iran can be considered successful, although the introduction of US sanctions has seriously hampered all work.

AFTER THE IRAQ WAR, IT WILL BE TIGHT ON INVESTORS

Along with Iran, Iraq occupies an important place in Russian trade and investment cooperation, despite the tragic changes in its fate as a sovereign state. Large-scale economic relations between Iraq and the USSR began in 1959. As part of the loans provided, our country implemented 96 projects in the country, of which 86 were completed. These include the comprehensive development of the North Rumeila, Luhay and Nahr Umr oil fields, as well as the development of the first stage of the large West Qurna field, and the construction of the Baghdad-Basra 22 oil pipeline. The contribution of the USSR to the development of the country's oil refining industry can be judged by the following fact: in the 70s and 80s, every second oil well in Iraq was drilled by Soviet, mainly Russian oil workers.23

The economic sanctions imposed by the UN Security Council in 1990 severely affected the economic cooperation between our countries. Thus, the trade turnover between them decreased from $ 2 billion in 1989 to $ 10 million in 1994. However, contacts in the oil and gas sector, despite everything, continued, although in a much "reduced" volume. In the spring of 1997, a contract was signed for the development of the second stage of the West Qurna field (West Qurna-2), which is part of the huge Rumeila field, under the terms of a Production Sharing Agreement (PSA). The proven oil reserves here are estimated at $ 6 billion. bbl.24 LUKOIL, Zarubezhneft and Mashinoimport have actively joined the implementation of the contract.

Rosneft, Tatneft and Slavneft also carried out operations in Iraq. We held negotiations with the Iraqi companies Gazprom and Sibur.

Russian companies engaged in investment cooperation with Iraq, during the years of sanctions, simultaneously served as buyers of Iraqi oil at the expense of the so-called UN oil-for-Food program, thereby providing up to 40% of oil exports from this country.

Currently, in addition to Russian business structures, companies from China, Germany, France, Belgium, Italy, Spain, Argentina, Australia, Algeria and other countries show great attention to Iraqi oil. However, they all take into account that the contracts concluded earlier and currently concluded can be implemented only after the final normalization of the situation in the country. At the same time, they understand that the price of the issue is very high, since oil reserves, according to former Iraqi Oil Minister Tamir al-Ghadban, are 3 times more than was thought just a few decades ago.25 Today, the country's oil production potential is estimated at 120-140 million tons per year. Experts believe that the real goal is to bring the average annual production volume to 175 - 200 million tons per year by 2010 and to 275 - 300 million tons by 201526. This can only be achieved if the long-suffering country finally finds peace and stabilization.

In the country, work has already begun on the repair and renewal of the oil industry destroyed by the war. At the same time, certain changes occur in the distribution of-

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Table 3

OPEC share in global oil and commercial natural gas production (1970-2006)

 

Oil production (million tons)

Commercial gas production (bcm)

1970

1985

2006

1970

1985

2006

The world as a whole OPEC

2269

1164

2614

760

3600

1602

1032

31

1759

153

2943

525

OPEC share (%)

51,4

29,0

44,5

3,0

8,7

17,8



Source: OPEC Annual Statistical Bulletin, 2006. Vienna, 2007, p. 2-24.

new forces. In some cases, the Government of Iraq gives preference to Western companies when planning work in the industry, pushing aside Russian companies. For example, Western companies were selected to conduct technical (reservoir) research at the two largest Iraqi fields - Kirkuk and Rumeila; before the overthrow of Saddam Hussein's regime, Russian Tatneft and Mashinoimport were working here.27

For Russia, the resumption of LUKOIL's investment activities in Iraq is of particular importance. The West Qurna-2 field development project prepared by this company will ensure the production of 25-30 million tons of oil per year. However, Lukoil and other companies are unable to resume operations at the fields. In November 2007, the Government of Iraq announced the cancellation of the contract with LUKOIL and intends to put it up for auction in 2008.28 It previously stated that decisions on all contracts will be made after the adoption of the oil law in the country, while stipulating that all investors will be treated equally. That is why LUKOIL still considers the contract legitimate.

It is important to note the extremely negative role that the Americans play; they do everything possible to prevent third countries, primarily Russia, from entering the country. However, in the fight for the renewal of the contract, LUKOIL will obviously seek support from the American multinational company KonokoFilips, which owns 20% of LUKOIL's shares.

In the current specific conditions of Iraq, the interest of Russian companies in other fields in the country also continues unabated. LUKOIL also expects to receive a contract for the provision of services at one of the largest fields - South Rumeila 29. Stroytransgaz has already received an invitation to participate in the restoration of the Kirkuk-Baniyas oil pipeline 30. Tatneft is also looking for opportunities to work in Iraq, as it is negotiating with an American company to work together in Iraq. 31 Norbest Limited, an affiliate of TNK-British Petroleum, managed to conclude a production sharing agreement (PSA) with the government of the northern province of Iraq - Kurdistan.32

Now it is difficult to predict how events will develop further in Iraq. The occupation of the country causes widespread resistance of the local population. According to the US UPI agency, from March 2003 to November 2007, Iraqi insurgents carried out about 1,200 attacks on oil facilities, including 576 oil pipelines.33

The escalating armed struggle and incessant sectarian and interethnic clashes are turning any work in Iraq into an extremely risky business.

KSA AND THE UAE ARE LOOKING TOWARDS RUSSIA?

Our relations in the oil and gas sector with the world's largest oil producer, the most important member of OPEC and the founding state of the organization - the Kingdom of Saudi Arabia (KSA) - are not just developing. The fact is that all interstate contacts were frozen for 5-7 years due to differences in the approaches of our countries to the assessment of certain aspects of terrorism and extremism. However, this position changed after Saudi Arabia itself had to experience a wave of terror. To date, the process of cooperation between the two countries, including in the field of oil and gas production, has been restored.

The most important event in recent years in the history of Russian-Saudi relations was LUKOIL's winning a tender for the development of gas condensate fields in this country. This is a very impressive victory, because until now, foreign companies - not only our own, but also those of other countries-were not allowed to enter the kingdom's bowels at all. The Russian company has signed a 40-year agreement with KSA for the exploration and development of gas condensate fields on an area of 30 thousand square kilometers.

The development of gas condensate fields by LUKOIL is part of the overall program for the development of the KSA gas industry, which provides for more than doubling gas production to 126 billion cubic meters by 2025. m per year. Gas will be widely introduced into the country's economy, replacing more expensive oil, which will mainly be sent for export. To implement the project, a joint venture with the state oil company Saudi Aramco, Luxar Energy, was created, in which Lukoil owns 80% of the shares.

The block under development is located in the northern part of the Rub al-Khali desert. Seismic surveys have already been carried out on the contract territory, and ahead of schedule. Drilling of exploration wells has also already begun. The seismic survey will be completed by the end of 2009 and the final assessment of hydrocarbon reserves in the block will be made. In February 2007, LUKOIL announced the discovery of a field with hydrocarbon reserves estimated at 700 million tons of conventional fuel 34. The development of the field will require $ 2 billion. investments.

Cooperation between Russian oil and gas companies and the KSA continues to develop. In 2005 Stroytransgaz received the official status of a contractor of the state oil Company.-

page 8

Saudi Aramco, which gave it the right to participate in tenders for the construction of pipeline systems in the country. In the same year, Stroytransgaz and the Riyadh Chamber of Commerce and Industry signed a contract to carry out project work on gasification of the capital of the kingdom. Other companies are also beginning to develop investment projects. In January 2008, Russian Railways won a tender for the construction of a railway worth $ 800 million.35 In the general context, trade and economic cooperation between Russia and OPEC member the United Arab Emirates is developing successfully. There are 10 representative offices of Russian companies and more than 200 joint ventures operating in the country, mainly in the field of trade, tourism, hotel business, and cargo transportation. The largest Russian project being implemented in the UAE is a metallurgical plant worth $ 150 million. 36

Unfortunately, the scope of cooperation in the oil and gas sector is still modest. In 2000, Rosneftegazstroy managed to sign an agreement with the authorities of the Emirate of Fujairah on the construction of an oil refinery with a capacity of 50 thousand barrels. at a cost of $ 150 million per day, the plant has already been built. In 2006, the Russian company Sibur signed several agreements with petrochemical companies in the UAE to implement a number of joint projects in the field of petrochemicals.

Participation of Russian oil and gas companies in tenders in the UAE is constrained due to the complexities of local legislation that allows the creation of limited liability companies only for citizens of the Emirates. Therefore, business relations between entrepreneurs of our two countries are limited to establishing contacts. However, in some cases, competitors of Russian companies act much faster and achieve greater success.

An important area of cooperation between the two countries may be investment projects that the UAE could implement in Russia. In this regard, the intention of one of the companies in this country to build an oil refinery with a capacity of 9 million tons and an investment of 4.5 billion rubles in the Chelyabinsk region by 2012 is noteworthy. US $ 37

Russia's bilateral relations with Indonesia in the field of cooperation in the development of the oil and gas industry leave much to be desired. So far, such areas of cooperation as geological prospecting, laying pipelines and creating the necessary infrastructure remain the most promising, but, unfortunately, slow to be implemented. The reason is the specific nature of the Indonesian oil industry development path, which historically uses the PSA system with large international companies, leaving no room for outsiders to independently enter the service market and supply equipment.

* * *

From all this, it follows that Russia is more or less successfully cooperating in the oil and gas sector with almost all OPEC countries located in Africa and the Middle East. But this cooperation is usually haphazard, without a single plan, as well as a certain "idea", a clear and precise end goal. Meanwhile, business ties with this group of countries, which are usually rich and dynamically developing, promise our renewing economy numerous benefits - both purely material, since there are huge opportunities for expanding the scale of mutual trade, and in the "non - material" sphere-the exchange of experience and useful ideas on reforming and improving the efficiency of the economy. They are especially important in view of the possible vicissitudes and cataclysms in the global fuel and energy complex and in the not always predictable global oil and gas markets.

It is extremely important for Russia to maintain at the proper political level its relations with OPEC as a whole and, if possible, with all the organization's member countries, to take into account the position of OPEC, and in some cases, to coordinate its steps and actions in the "oil and gas sector"with it. This requires a truly "jewelry" diplomacy.


1 OPEC Annual Report, 2006. Vienna, 2007, p. 18, 20.

2 For more information, see: Karpushin A. Neft i Rossiya [Oil and Russia]. Alekperova V. Yu.). Moscow, 2007, pp. 100-206.

3 International Energy Agency. World Energy Outlook 2007. Paris, 2007, p. 82.

4 International Energy Agency. Oil information 2007. Paris, 2007, p. 11, 56; International Energy Agency. Gas information 2007. Paris, 2007, p. 11, 20.

5 Mintop, 2004, No. 9, p. 10.

6 Kommersant, 27.12.2005.

7 Nezavisimaya Gazeta, 06.03.2008.

8 Cit. in: Globalization of Relations and Foreign Economic relations of Russia (ed. Faminsky I.). Moscow, 2004, p. 287.

9 Rossiyskaya Gazeta, 31.01.08.

10 Ist.: Bulletin of the Academy of Foreign Trade. Corinth, 2005, No. 22.

11 BIKI, 24.11.2005.

Titarenko V. 12 Vozraschenie Rossii v Algir [Russia's Return to Algeria]. Mezhdunarodnaya zhizn, 2006, No. 5, p. 8.

13 Neftyanye vedomosti, 2007, No. 37.

Evtushenkov V. 14 Posle zatishya: Rossiya i arabsky mir na novom etape [After the Lull: Russia and the Arab World at a new stage].

15 BIKI, 23.08.2007.

16 RBC daily, 25.12.2007.

17 RBC daily, 10.12.2007.

18 RBC daily, 21.02.2008.

19 RBC daily, 20.09.2007.

20 RBC daily, 25.10.2007.

21 Kommersant, 23.10.2007.

Karastin V. 22 Rossiya-Irak: perspektivy sotrudnichestva [Russia-Iraq: Prospects for cooperation].

Mikhailov S. 23 Zhar-ptitsa dlya Ivana [Firebird for Ivan]. Neft Rossii, 2001, No. 9, p. 96.

24 LUKOIL. Osnovnye fakty [Basic Facts], Moscow, 2006, p. 43.

25 Oil and Gas Journal. June 20, 2005, p. 33.

26 Ibidem.

27 Neftyanye vedomosti, 2005, No. 13.

28 RBC daily, 12.10.2007.

29 RBC daily, 12.12.2007.

30 RBC daily, 18.12.2007.

31 Kommersant, 30.10.2007.

32 Kommersant, 30.10.2007.

33 Neftyanye vedomosti, 2007, No. 37.

34 RBC daily, 13.02.2007.

35 Kommersant, 22.02.2008.

36 Rossiyskaya Gazeta, 22.01.2008.

37 Kommersant, 24.11.2008.


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