02-10-02 LUKoil, Yukos and Sibneft are the first on the Russian side to reap rewards from the inaugural US-Russian Energy Summit, which opened in the American oil capital Houston. The US Export-Import Bank said it would sign a $ 100 mm agreement with the oil majors to provide medium- and long-term loans to buy US equipment and services for exploring, refining and marketing.
The two-day summit is a by-product of a Moscow meeting between Presidents Vladimir Putin and George W. Bush earlier this year. Topping the agenda is America's pursuit of safeguards against overreliance on supplies from the volatile Middle East. With Russian oil output booming for the fourth consecutive year, Moscow is looking for ways to play a role in fulfilling Washington's changing energy needs.

ExImBank said the $ 100 mm agreement was part of the Bush administration's national energy policy to diversify US energy sources and to encourage commercial ties. The agreements were set to be the first signed at the summit, which will include so-called two-by-two meetings between Economic Development and Trade Minister German Gref, Energy Minister Igor Yusufov and their US counterparts Energy Secretary Spencer Abraham and Commerce Secretary Donald Evans.
Prime Minister Mikhail Kasyanov said in a greeting addressed to the summit that "closer energy contacts will contribute to the stability and predictability of the global energy market and will secure a balance between the interests of energy producers and consumers," it was reported.

Kasyanov said he hopes the summit "will yield new investment projects and major business agreements and help establish a climate of trust and mutual understanding in the new areas of our strategic cooperation." "This is an unprecedented meeting of such level and it is especially important now that cooperation between Russia and the United States is expanding," Gref's ministry said.
Yusufov told delegates at the summit that Russia, with about 7 % crude output growth in 2001 and 2002, has the highest rate of extraction among the world's main oil producers. But to maintain that growth, about $ 50 bn in investments will be needed through 2010, Yusufov said.
Evans acknowledged as much, saying Russia "is very much ready" for American capital inflows and technology. "The summit is certainly not the end, more the beginning than anything else," he said.

Another item on the agenda is a proposal by Simon Kukes, the head of No. 4 producer Tyumen Oil, or TNK, urging Washington to purchase crude oil for its strategic petroleum reserve directly from Russia. Kukes told that he would propose at the summit "a new framework for cooperation," including North Atlantic Treaty Organization purchases of Russian fuel and the creation of global strategic oil stocks in Nova Scotia, Singapore and South Africa.
"There are plenty of places nicely suited for Russian crude," Kukes was quoted as saying. "We can provide stability."
Uncertainty over Middle Eastern oil supplies has led the United States to look at boosting its strategic reserve, which is currently stocked with oil imported from a variety of oil-exporting nations.

Kukes said Russia, the world's second-largest producer after Saudi Arabia, should play a more active role in supplying America and that US capital and technology could help make that happen.

"There's been lots of talk about investing in Russia," he said. "But little done." Russian exports are expected to grow 50 % to 4.5 mm barrels by 2010, Kukes said, adding that the industry has entered a period of "robust and sustainable growth," though foreign companies still consider it risky.
Kukes told that Russia could be exporting as much as 1 mm bpd of oil into the United States by 2007, if not before. Russia currently lacks the infrastructure to efficiently export large amounts of crude to North America. Even so, Yukos is experimenting with tanker shipments, including a groundbreaking delivery of 2 mm barrels this summer. It is also pursuing, with the government and other oil majors, building a massive port in the northern port of Murmansk to streamline deliveries to America.

Yukos CEO Mikhail Khodorkovsky believes the tanker shipments are profitable if oil prices stay above $ 19 a barrel. Kukes, however, said that transportation costs under current conditions mean shipments to America would result in a loss of about 40 cents per barrel.
"Long-term, after opening new routes to the north and south, we can use supertankers which would make it possible," Kukes was quoted as saying. "Within one year we will investigate the market. When new routes open up, we can gradually get about 1 mm bpd into the US market."
The push for cooperation could lead to the purchase of Russian fuel by NATO and the creation of a Russian-US strategic petroleum reserve for other countries, Kukes said.

The summit, held at Rice University, is featuring panel discussion from top Russian oil executives such as Kukes and Rosneft first vice president Alexei Kuznetsov together with ConocoPhillips chairman Archie Dunham and ChevronTexaco vice chairman Peter Robinson.
"From the US perspective, the desire to make major long-term investments in Russia has never been stronger, but it has been inhibited by the lack of a legal and commercial framework to make the investments economical," Dunham told. Participants will also discuss methods to employ new technology and equipment in Russia's aging oil fields.
Many oil companies are looking to get out of the oil service business by selling or spinning off units, and smaller firms like United Heavy Machineries, or OMZ, the nation's largest oil field equipment maker, are hoping to capitalize on the opportunity.
"It will take time, up to five years, but for us it is a good, positive process," OMZ CFO Mikhail Kossolapov was quoted as saying.