Last year's main result in the sphere of oil export was growth in its physical volume. The favorable situation on the world market stimulated both crude oil and petrochemicals exports, which peaked in August 2001 at nearly 16 million tons of crude and nearly 7 million tons of petrochemicals. Up through November, according to the State Customs Committee, Russia exported 136 million tons of crude, 32.6 million tons of fuel oil, 23.7 million tons of diesel fuel and 3.25 million tons of gasoline.

One bad thing about Russia's oil exports is a trend that has persisted over the last several years: Export of crude has been growing faster than that of petrochemicals. The reason apparently lies in the poor technological efficiency of Russian oil refineries: It is still economically more efficient to export crude than petrochemicals. An interesting phenomenon last year was that the growth of exports did not cause any shortage on the domestic market, because oil production had increased accordingly. Over the year, the domestic market remained more or less stable and, toward the year's end, supply even exceeded demand.

In September, Russia's exports of oil and petrochemicals went down, mostly in the fuel-oil segment, due to the seasonal campaign of stockpiling fuel for winter. Gasoline and diesel-fuel exports were less affected, as their domestic consumption had gone down. Meanwhile, consumption of oil and petrochemicals declined due to a slowdown in economic growth, seasonal factors and the accumulation of huge reserves of crude oil at strategic and commercial stockpiles and oil refineries in Europe, particularly in northern Europe.

Another factor that caused Russia's oil exports to drop in October and November 2001 was the unfavorable-for-Russia structure of demand in Europe (mostly in northern Europe): The demand for light, low-sulfur oils had increased at the expense of that for heavy, high-sulfur ones (Urals).

The government's decision on increasing tariffs that took effect from Aug. 1, 2001, limited the opportunities of delivering crude oil by railroad transport, causing a considerable reduction in the export of petrochemicals, particularly those that cannot be exported by sea, first of all gasoline.

Infrastructures

A number of projects implemented over the last year have served to increase Russia's oil-export potential, including pipelines and seaports in Russia, the C.I.S. and the Baltic States.

Particularly important was the construction of a roundabout pipeline to supply Russian oil to Europe, bypassing Ukraine. The pipeline was put into operation in September 2001 and is owned by Transneft. The capacity is not very high at this moment, but plans call for bringing it up to 52 million tons a year. Besides, the start-up of the pipeline has prompted Ukraine to offer lower transit rates.

Russian oil companies also take part in foreign pipeline-construction projects, specifically in the international pipeline project Adria, of laying a duct from the Druzhba pipeline to the Croatian port of Omishal on the Adriatic coast. Omishal is a deep-water port where large tankers can enter. In addition to other benefits, the project will allow Russia to export oil bypassing the Turkish straits. The pipeline will be owned by Russian oil company YUKOS and Croatian transportation company Jadranski Naftovod, and a serious minus of the project is that the pipeline's future operation will require a lot of coordination and logistical efforts, first of all with Hungarian transportation companies, where the duct will be coupled to the Druzhba pipeline.

Although YUKOS has supervised the Hungarian direction of Russia's oil exports and must be quite familiar with the local situation, it will not be easy for it to obtain favorable conditions for pipeline operation from the Hungarians. Moreover, the project has met strong opposition from Ukraine, which is refusing to award favorable transit rates for the oil that will be pumped along the new route.

Another foreign project involving YUKOS and some other Russian companies is that of building a pipeline from the Russian city of Angarsk to the Chinese city of Datsin. Though quite costly (the estimated cost is $1.7 billion), the pipeline will allow Russia to export an additional up to 20 million tons of oil a year beginning in 2005, which means an additional $10 billion flowing to the state budget every year.

Ports

Following the launch of the Caspian Pipeline Consortium, the Novorossiisk Seaport has undergone some reconstruction, adding more storage facilities for oil and petrochemicals. As a result, the port's potential for oil export has increased to nearly 50 million tons a year.

Within the framework of the Baltic Pipeline System project, three ports are being built on the Gulf of Finland coast, at Primorsk, Ust-Luga and Batareinaya. Their composite capacity is estimated at 30 million tons a year.

Modernization and expansion have been under way in a number of other ports as well: LUKoil is investing in the project of modernizing the port of Odessa, while YUKOS is taking part in modernizing the Muuga port in Tallinn.

Finally, there are projects that do not involve Russian companies, but serve to boost Russia's oil-export potential. The most important of these are reconstruction projects at the Ukrainian ports of Berdyansk and Feodosia and the expansion of the Lithuanian ports of Butinge and Klaipeda.

(The author is a Moscow-based freelancer who specializes in economic issues.)