RussNeft Intends to Export All the Crude Produced.

RussNeft is going to start up in June an oil loading pipe-rack of 5 million tons yearly capacity at Zhecha railway station in the Bryansk region. According to President of the Company Mikhail Gutseriev, it will allow RussNeft to export almost all the crude oil produced by the Company.
"By the end of this year we plan to produce 20 million tons of crude in a year and come to 100 % export. Presently the Company is producing 1.2 million tons per month" - Gutseriev said at the terminal opening ceremony last week. As representatives of the Company inform, Russneft is exporting 43 percent of all its crude oil production. 33 percent of the exported volumes are delivered via Transneft system and the remaining 10 percent by railway. In 2004 RussNeft produced about 10.4 million tons of crude oil.
Via the new pipe rack linked with Druzhba pipeline the Company is going to load 40 thousand tons of crude oil in June and 180 thousand tons - in July, and beginning from August to gradually achieve the level to 400 thousand tons per month. As a result total volume of crude oil export by railway will amount to 2.2 million tons in 2005. In future the capacity of the loading facilities will be increased to 7 million tons per year.
According to Gutseriev, Byelorussia, Baltic States, Eastern Europe and probably Ukraine will become the main destination points of the export by railway. The Company won’t mention any specific routes explaining that presently they are considering all the existing options of export to enable estimation of the profitability.
However Anatoly Kupriyanov, Director of Mozyr Refinery, who attended the opening ceremony, said that they had no specific agreement with RussNeft in view of the deliveries by railway. Presently the Refinery receives only 30 thousand tons of crude oil a month, though its discharge pipe rack allows taking 1.5 million tons a year.
Deliveries to Baltic ports seem more likely, which is backed up by the fact that larger portion of the financing for Zhecha terminal, that is $60 million out of the total $90 million, was given by Glencore Trader, the main uptaker of the Company’s crude oil.
Some sources in oil industry also inform that RussNeft has an agreement with Glencore, according to which Glencore is to finance purchases of new production and infrastructure assets for the Company in exchange for crude oil deliveries. However representatives of the Company do not confirm that Glencore is going to be the main exporter of RussNeft's crude.
Moreover, RussNeft is going to monthly refine about 100-150 thousand tons of crude oil at Yukos’ Syzran Refinery under a processing deal. Such necessity arose after the Company acquired chain petrol stations Grand. Gutseriev expressed his interest in buying the Refinery, if it was offered for sale. RussNeft is also considering options of developing its own refining including construction of a new refinery.