Main page > Comments > Fuel & Energy > Struggle for Eastern Siberian oil export preferences

Struggle for Eastern Siberian oil export preferences

The Eastern Siberia-Pacific Ocean (ESPO) pipeline project is still a subject of quite heated debates. On one side, there are lobbyists of this project insisting on the necessity to diversify Russian oil exports inter alia increasing oil supplies to China. This group of lobbyists includes mainly representatives of the "siloviki" Russian political elite group and Rosneft top managers. On the other side, there are skeptics who point to a not at all fine situation regarding oil production in Russia meaning that simultaneous construction of several large export pipelines may simply result in redirection of exports from European consumers to Asian buyers, not in diversification of exports.

The camp of de facto ESPO skeptics has acquired new members over the past few weeks represented by the financial block in the government and personally Alexey Kudrin unhappy with budget losses that will inevitably emerge due to substantial preferences provided to the Eastern Siberian deposits engaged in filling in the ESPO. The budget is to miss about 120bn rubles annually.

It is indicative that the finance minister presents his positions not as an open opponent of the ESPO, but as an opponent of excessive preferences provided to Rosneft. Kudrin does not deny the ESPO's geopolitical importance, as it was acknowledged personally by Vladimir Putin, but he rationally refers to the necessity to prevent the budget from losing large revenues. The "struggle for the budget" is one of the few "mega concepts" that can be employed to convince the top political authorities to refuse another "mega project" - the above-mentioned diversification of oil exports represented by the ESPO.

Nevertheless, there are grounds to believe that Kudrin's counterattack will be repulsed by Rosneft and the Vankor field, a key deposit for this oil firm and the ESPO, will get a zero export rate in the future while Rosneft will anyway manage to get all the preferences it has possibly missed in the disputable period post factum. A fundamental reason for such a decision is the real concern of Russia's top leaders about the problem of diversification of Russian oil exports, which adherents of increased exports to China use skillfully to their advantage. As a long as oil prices are high, the world economy is showing signs of recovery and relations with Europe remain tense, "geopolitical" arguments for the ESPO will outweigh criticism (including economic reasons) of this project.

By NESF leading expert Stanislav Mitrakhovich


Bookmark and Share

Analytical series “The Fuel and Energy Complex of Russia”:

State regulation of the oil and gas sector in 2023, 2024 outlook
Gazprom in the period of expulsion from the European market. Possible evolution of the Russian gas market amid impediments to exports
New Logistics of Russian Oil Business
Russia’s New Energy Strategy: on Paper and in Fact
Outlook for Russian LNG Industry

All reports for: 2015 , 14 , 13 , 12 , 11 , 10 , 09 , 08 , 07

Rambler's Top100
About us | Products | Comments | Services | Books | Conferences | Our clients | Price list | Site map | Contacts
Consulting services, political risks assessment on the Fuel & Energy Industry, concern of pilitical and economic Elite within the Oil-and-Gas sector.
National Energy Security Fund © 2007

LiveInternet