Testing of crude quality in a laboratory in Nefteyugansk.
Photo: Alexey Myakishev
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Gref to Equal Urals/Brent Prices
In response to the president’s assignment to level crude prices for Russian Urals and U.S. Brent, Economic Development and Trade Minister German Gref has revived a script of ten years of age, proposing to establish a Crude Quality Bank. But this bank could be set up provided sour crude reserves and production are diversified, i.e. only if Bashneft and Tatneft oil companies are finally shut off the export pipe.
On August 16, Gref suggested setting up a Crude Quality Bank as a method to narrow the gap between Brent-Urals prices. The concept dates back to 1999 and was masterminded by then Energy Minister Viktor Kalyuzhny. Actually, the Quality Bank provides for procedures, whereby suppliers of less-quality crude make offset payments to suppliers of crude of higher quality, should they pump the crude via one and the same pipeline. That is to say the revenues are being redistributed, although final crude prices remain fixed. On the other hand, the Quality Bank won't restrict access for low-quality crude to export pipelines, should no banning actions be introduced. Therefore, any influence on the end price of crude is out of the question. Similar procedures are applied in the Caspian Pipeline Consortium.
Now the two companies – Bashkortostan’s Bashneft and Tatarstan’s Tatneft – impair Urals quality by adding sulfur fractions in Transneft pipelines. Both companies export no more than 18 million tons of crude on year (vs. 250 million tons shipped from Russia overall). But of all officials, shelving the Crude Quality Bank concept in 1999 could be blamed on Tatarstan’s President Mintimer Shaimiev.
Gref was cautious yesterday, never calling to deny the export pipe access for Bashneft and Tatneft, but the meaning of his statement clearly points to such action.
www.kommersant.com
All the Article in Russian as of Aug. 17, 2005
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