Crisis and Oil

22.11.2008 (18:41)

How world crisis will influence on oil processing and oil producing branches? How to improve the situation? Mikhail Burmistrov, Head of analytic department of INFOline, tells about these questions.

– Mr. Burmistrov, is it impossible to forecast decrease of the volume of oil production and processing?

– The volume of oil production decreased in 2008, it began before slump in prices. It is caused by heavy taxes, increase of price for pipes and building services in the framework of realization of investment projects on new oilfields development. In 2007 the volume of oil transportation by rail was equal to the volume of oil extracting, but it was lower than oil processing volume because “North” pipeline was put into operation by Transneftproduct OJSC.

– Could you tell about forecasted results of this year?

– The volume of oil processing will increase by 1.5%, oil products transportation – by 1% in 2008.

– Is railway tariffs rate important for oil transportation?

– It is not important for oil companies because main part of margin is took by the state by means of tax on natural resources production and export duties. The growth of costs on pipeline projects realization, which causes increase of oil producing tariffs, decreases difference in price of oil transportation between pipeline and railway.

In 2007-2008 tariffs on oil cargoes railway transportation practically did not impact on oil companies’ finance results. However price reduction to $70 for barrel may have adverse affect on oil export by rail.

– Is it impossible that railway operators’ tariffs decrease will prevent the oil production volume slump?

– Tariff regulation is not important on the market of oil cargoes railway transportation. Biggest part of oil transportation is carried out by largest private operators (OTEKO, BaltTransService) or affiliated companies of holdings including UTS, LUKOIL-trans, Gazpromtrans.

There are 170,000 oil tank cars in Russia as of September 2008. This quantity meet requirement of consignors. According to research of our company “The market of Russia’s railway rolling stock: 2008-2012”, the quantity of new wagons increased in 2008. Seven models of oil tank cars are produced in Russia and Ukraine. Russian market capacity for new oil wagons amounted to 1,500-1,600 units per quarter in I-III quarters 2008. It didn’t exceed 1,200 units in II-III quarters of 2007.

Nowadays, growth of the oil production volume depends on the Government measures to cut tax and stimulate investment activity of oil companies (including small ones). In 2008 oil production stagnates in Russia, economic crisis causing slump of oil companies capitalization will bring to investment programs decrease.

Interviewed by Evgeniya Egorova
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