Lukoil to Replace Yukos as China’s Oil Supplier
Created: 22.10.2004 11:22 MSK (GMT +3), Updated: 12:00 MSK, 1 hour 19 minutes ago
Lukoil railway oil tankers / Photo from
www.lukoil.com
Russian oil major Lukoil seems to have changed its mind about replacing the embattled Yukos Oil Company as the main supplier of oil to China. This was announced on Thursday, Oct. 21, by Gennady Fadeev, the president of Russia’s state transportation company Russian Railways.
Fadeev said that Lukoil and Russian Railways are now in talks on the amount of oil supplies to China and the tariff for oil transportation by rail. “We are ready to lower tariffs for transporting oil to China if the amount of oil supplies increases to 30 million tons per year. We want to be competitive with oil pipeline transportation,” said the president of the transportation giant, quoted by Prime-Tass economic news agency. He added that the proposal to lower transportation tariffs will be submitted to the Economic Development and Trade Ministry for consideration.
Meanwhile, Lukoil’s press secretary Dmitry Dolgov said that the company is looking into the possibility of supplying oil to China by rail, but that it is still too early to talk about any details. A source in the oil company told the Vremya Novostei newspaper: “Due to the change of the market situation in Europe we are now studying the idea [of delivering oil to China].”
The source further explained that the discount on the Russian sour Urals crude blend amounts to approximately $7-10 per barrel as compared with the price of lighter Brent oil blend. “The overall losses of the Russian oil industry delivering all its oil to Europe amount to more than $5 billion a year, including budgetary losses of $2 billion,” according to Lukoil’s experts quoted by the paper. Just a month ago Lukoil refused to even consider the possibility of deliveries to China citing very high transportation tariffs.
Currently Russia’s embattled oil major and the country’s main exporter Yukos accounts for almost all oil exports to China. The deliveries of crude were supposed to amount to 6.5 million tons of oil this year, although in September Yukos announced that it was cutting part of its exports to China, citing high transportation costs.
The oil exports to China were set to decrease to 5.4 million tons, but on Thursday, Oct. 21, a Russian Railways’ official said that Yukos is likely to meet its original obligations after all. MosNews reported in March 2004 that Yukos and Russian Railways had signed an agreement to increase oil transportation to China to 15 million tons by 2007.
Quelle: MosNews