The change in strategy is the byproduct of government attempts to contain corruption, which has resulted in oil companies stockpiling millions of tons of oil that they are not refining in Russia so as not to depress gasoline prices.
"Right now, the country is simply flooded with oil," said a vice president of a top-10 oil firm who asked that his name be withheld. Consequently, the executive said, oil prices on the free market have plummeted from a summer high of 4,900 rubles ($172) a ton to about 2,800 rubles a ton.
No. 2 oil major Yukos has even appealed to the Energy Ministry with a request that mandatory deliveries to the internal market be decreased by 800,000 tons because it is impossible to sell the oil.
"It is not profitable for factories to refine such a large amount of crude oil," said Gennady Krasovsky, an analyst for the NIKoil brokerage. "It could lead to a decrease in prices for oil products," he said.
Krasovsky said that most likely the oil companies agreed among themselves to support domestic prices by restricting supplies.
The market is glutted with oil because of the strict system imposed last year by Deputy Prime Minister Viktor Khristenko, who was appointed to head the commission for granting access to export pipelines.
The commission eliminated its system of granting much-coveted additional export quotas, which were widely thought to have been sold to favored firms in exchange for kickbacks.
Khristenko last year proposed auctioning 25 percent of the oil export quotas, but this process has yet to begin. As a result, during the first quarter of 2001, companies will export a total of 26 million tons of oil. In 2000, exports averaged 33 million tons per quarter.
The oil agency Petroleum Argus reported that Energy Ministry officials now say that deliveries to Russian refineries will be 2 million tons more than they should be during the first quarter of 2001, and it is now allowing oil companies to increase their exports.
This is an unprecedented event.
Beginning in 1999, the ministry insisted that the companies first supply oil to the domestic market, and only after that obligation was fulfilled could they export. If a company did not meet its obligations, the ministry would order the national pipeline monopoly, Transneft, to shut off its exports.
Energy Ministry spokesman Oleg Smirnov could not explain the reason for the unexpected approval of increased exports. Government officials, however, are well-informed about the changes.
"Of course, the Energy Ministry cannot cancel the [domestic] balance targets and increase exports independently of us," said an official on Khristenko's export commission. "But we are fully informed about the situation. The commission might reconsider its decision and agree to increase export deliveries."
Khristenko's commission is considering requests submitted by several companies to bring back the additional quota system, Petroleum Argus reported.
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