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Wednesday, September 26, 2018

INTERTANKO highlights the importance of Russian oil at the Mare Forum, St. Petersburg

The increase in oil exports from Russia has probably saved the world from an oil crisis, said Erik Ranheim, INTERTANKO’s Manager Research and Projects, at the Mare Forum, St. Petersburg, 5-6 October 2004.

In his presentation “The importance of Russia and its neighbouring countries for the tanker market”, Ranheim pointed out that Russia has the seventh largest oil reserves in the world and it has been reported that these could even prove to be three times larger than previously thought. The Former Soviet Union (FSU) is now the second largest crude oil exporter in the world after Saudi Arabia.

The increase in exports from the FSU has been quite tremendous, taking total petroleum exports from 2.4 mbd in 1994 to 7.5 mbd in 2004. Crude oil exports have declined from 79% of the total in 1994 to 69% Jan-Aug. 2004. The current oil products share (31% of total exports) is anticipated to continue to increase to circumvent crude oil export bottlenecks. These booming exports from the FSU have covered a large part of increasing world oil demand.

Russia is working to find new markets for its oil and to gain a stronger foothold in the U.S. and Asian markets. A pipeline from Russia to serve the Pacific markets has been proposed and in 2005 the pipeline from Baku to Ceyhan will start to shift crude oil loadings from the Black Sea to the Eastern Mediterranean. A further pipeline from Western Siberia to a deepwater port on the Barents Sea, to support long-haul sales to the U.S., does not appear to be of immediate interest to Moscow. Its main focus in expanding its export infrastructure involves further expansion of the Baltic Pipeline System and the port of Primorsk, from today’s 1 mbd to 1.2 mbd. On this basis it looks as though it will be the tanker trades from the Baltic that will expand the most, suggests Ranheim, which will benefit the aframax segment in particular.

The main task in developing Russia’s oil industry will be to expand oil exports in the period to 2010 and then stabilise them by increasing the presence of Russian oil companies in foreign markets.

Ranheim concluded that oil from Russia and neighbouring FSU countries will continue to expand the tanker market, albeit probably at a slower rate than that experienced up to now. In the longer term pipelines may take a greater market share. Although the strong increases in the trades from the Baltic and the Black Sea present a difficult task, the safety performance of the industry has improved and it is more than up to the challenge.

Erik Ranheim’s presentation can be viewed here