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China Declares a Five Year Plan for Oil
// The Russian Government Has Been Informed
International Cooperation
Last night, members of the Russan-Chineese subcommittee on energy cooperation left Moscow for Beijing. Kommersant was able to learn that one of the main subjects to be discussed in China is guarantees of a stable Russian oil supplied via rail to China. Kommersant has information that the Chinese intend to discuss the future of YUKOS – China’s only oil supplier. Most likely, China will not get any answers, since the subcommittee’s meetings will be held without its Russian chairman, Minister of Industry and Energy Viktor Khristenko.
The energy subcommittee meeting is a traditional activity held before the fall Russia-China summit. Yesterday, another subcommittee, on communications and information technology, started meetings in Beijing. Both of those subcommittee, and many others, are part of the committee to prepare for the summit meeting. Last night, the first group of the energy subcommittee, consisting of officials from the Industry and Energy and Interior Ministries, arrived in Beijing. There are forty members in the delegation. Besides government officials, it consists of representatives from Russian Railroads, YUKOS, TNK-BP, Transneft, Gazprom, RAO UES of Russia and other companies. The main meeting of the subcommittee will be held on August 25.
Kommersant has learned the details of the agreement the Chinese intend to sign. The first point of the agreement an increase in the oil supply to China in 2005 to 10 million tons a year, and beginning in 2006, in excess of 15 million tons. At the same time, the Ministry of Industry and Energy takes upon itself to coordinate the development of oil resources and to name Russian oil exporting enterprises supported by the government. Chinese authorities are planning to sign the agreement for five years, with an automatic extension for the next five years, if Russia and China “do not in written form state their desire to terminate the agreement six months prior to the end of the contract.”
Right now, YUKOS is the only supplier of oil via rail, but it does not fall in the category of companies “supported by the Russian government.” According to the agreement it signed in March with Chinese state companies, YUKOS is to supply 8.5 million tons of oil via rail next year. YUKOS has the infrastructure necessary for supplying oil and it is developing oil fields in Eastern Siberia, which are the closest to the Chineese border.
Kommersant has information that, at the meeting on August 25, chairman of Chinese State Council and Chinese co-chairman of the committee Wen Jiabao is going to rise the question of the future of YUKOS and how much China can rely on the stability of future oil supplies from that company. He intends to discuss these questions with his Russian subcommittee colleague Viktor Khristenko. However, it is very likely that Khristenko will not be able to answer Jiabao’s questions. The Minister of Industry and Energy spoke at yesterday's Cabinet meeting, which was dedicated to the 2005 budget. The budget plan will be sent to the State Duma on August 26. Until then, none of the key economy ministers will leave Moscow. Neither the Industry and Energy Ministry nor YUKOS provided any comments on how the committee meeting was to be held.
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YUKOS Runs Out of Money
Yesterday, YUKOS oil company announced the reduction of its investment program and a decrease in oil production for 2004, in connection with charge-offs from the company’s accounts to pay its $3.4-billion worth of tax arrears for 2000. “In connection with charge-offs of more than half the monthly income from YUKOS accounts, the company has made a decision to reduce capital investments and operational expenses by $700 million, and delay the payment of certain taxes,” the YUKOS report reads.
The YUKOS investment program for this year was planned at $1.9 billion. The company was planning to increase oil extraction to 90 million tons, compared to 80.3 million tons in 2003. Yesterday, YUKOS announced that it reduced its oil extraction plan to 86 million tons. YUKOS also said, that since it went into executorship at the end of June, the company has paid $700 million, and $800 million more was charged off indisputably. The company announced that it intends to pay about half of the additional taxes for 2000 - $1.7 billion, before the end of August.
Petr Sapozhnikov
All the Article in Russian as of Aug. 24, 2004
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