Every oil company wants its own on-line exchange.
The latest project, organized by the nation's No. 5 oil company Tyumen Oil Co., or TNK, and news agency Interfax, is to set up an international trading floor.
Interfax Information Services group, which includes Interfax, and Swiss trading firm Crown Resources AG last month signed an agreement in London under which electronic oil and oil-product trading floors would be set up by the end of the year.
The partners have set up Oil-On-Line.com PLC on a 50:50 basis, with charter capital of pounds 2 million ($3 million). The partners plan to attract key market players as shareholders.
Crown Resources, with an annual turnover of more than $3 billion, is part of Crown Trading, which was established by the Alfa Group.
Thus the new exchange is connected to the TNK, which is jointly owned by Alfa. According to experts, TNK sells about 4 million tons of oil and oil products through Crown Trading each year.
Interfax head Mikhail Komissar said the new exchange will help oil firms sell their goods more effectively.
"Oil producers have been too concerned with production and have neglected marketing their products. They relied heavily on personal acquaintances. Now the Internet is opening up the possibility of selecting the most favorable conditions for supply and demand on a global scale," he said.
Komissar had difficulty assessing the number of future trade participants, but said "initial negotiations with prospective participants allow us to hope that turnover after a year will be $2 billion to $3 billion."
TNK and Interfax are not the first to venture into oil trading over the net.
In May oil major Sibneft, national pipeline monopoly Transneft, oil-product transporter Transnefteprodukt and the Railways Ministry announced that they planned to set up virtual trading floors with turnover in the tens of millions of dollars.
Interfax had originally wanted to get in on the Sibneft project and had proposed negotiations, anonymous sources close to the oil company said.
Interfax's Komissar is confident that the project with TNK will be far larger than Sibneft's one. Oil-On-Line.com PLC will trade any oil, be it Norwegian, Arabian, Venezuelan or, of course, Russian, under equal conditions. Local market participants are skeptical about the future of the virtual floor.
"I doubt we'll be running to them," said a representative of oil trader Nafta Moskva. Local manufacturers and traders feel that trading on exchanges, let alone on the Internet, has a long way to go before it really takes root in Russia, he added.
Sibneft believes that the project will be successful only if several major leading companies participate.
"If the originators consist solely of traders it will be difficult to broaden the circle of participants since the floor will be regarded as a corporate site," said a Sibneft spokesman.
Market agency Petroleum Argus agrees. "Those who set up floors like this want to use it as a tool to influence price-formation," Petroleum Argus experts said.
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