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Voice of America
January 10, 2003
Energy Specialists Examine Outlook for Russian Oil Exports
Barry Wood

Energy specialists Thursday at a forum in Washington examined the outlook for increased exports of Russian and Caspian Sea oil.

Amy Jaffe, an energy analyst at the James Baker Institute in Houston, said weather and logistics make it unlikely that Russia can quickly boost its oil exports. She said because of severe winter weather, Russian exports are likely to fall over the next few weeks. However, she believes Russian exports will rise substantially over the next 12 months.

The discussion at the Carnegie Endowment examined recent developments in building the pipelines that would bring more Russian and central Asian oil to Western markets. While in the past Russia regarded Kazakhstan as a rival supplier, more recently it has become more cooperative.

"Russia's key goals in the Caspian are to assure as much transit through Russia as possible, and as much Russian ownership of assetsboth through a favorable division in the Caspian [Sea] and, especially in Kazakhstan, of Russian partnership in key projects," said Martha Olcott, an energy researcher at the Carnegie Endowment.

Western oil companies have invested heavily in Kazakhstan and are building an export pipeline from Baku in Azerbaijan westward across the mountains to Ceyhan on the Turkish Mediterranean coast. Russia meanwhile relies on its Black Sea port of Novorossiysk for its central Asian oil exports. Turkey worries about an increasing number of oil tankers passing through the narrow Bosporous strait adjacent to Istanbul.

Amy Jaffe said one way to ease the pressure on the Bosporous is to reverse the flow in the pipeline that currently carries oil from Slovenia north to Hungary. "That system with a very small investment in the couple hundred million dollars category, not in the billion dollar category, could be bringing a lot of Russian exports out to the west in a way that didn't involve Turkey at all," she said.

There is unused capacity in Soviet-era pipelines from Russia to Slovakia and Hungary.

Russia has been steadily boosting its hard currency earnings from oil exports. The oil market is currently unsettled with prices at a multi-year high. There is uncertainty concerning the possibility of war with Iraq and its impact on both supply and price.

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