Russia's Oil and Gas Export Regulation Overhaul Faces Skepticism

The Russian government's efforts to restructure the interdepartmental commission on access to export pipelines (MVK) have sparked concerns about the potential for favoritism and patronage in the allocation of oil and gas exports. The MVK, a powerful body that has been in operation for over six years, plays a crucial role in determining access to export pipelines and approving quarterly figures on production, refining, and exports. The government's proposal to appoint a new chairman, likely Prime Minister Mikhail Kasyanov or one of his deputies, has raised worries about the potential for large-scale patronage, with export allocations being doled out to companies with close ties to the ruling elite.

Key Takeaways:

• The Russian government's proposed changes to the MVK are aimed at increasing transparency and fairness in the allocation of oil and gas exports, but many experts remain skeptical about the effectiveness of the reforms.
• The MVK has been accused of favoring certain oil companies and individuals by doling out extra allocations to fund government-backed programs and issuing "improper documentation".
• The department of energy and natural resources has proposed appointing a new chairman to oversee the MVK, with Prime Minister Mikhail Kasyanov's deputy, Roman Abramovich, being considered as a potential candidate.
• High oil prices have driven Russian crude exports to 72.52 million metric tons in the first seven months of the year, a rise of 7.6 million tons compared to the same period last year.
• The crude export boost is largely due to a sharp rise in extra allocations, including those allocated under state-backed projects, which have increased domestic product needs for the harvesting season and forthcoming winter period.
• The government has been struggling to resolve the problem of non-payment by domestic consumers, leading to a deficit of gasoline of 500,000 tons and a shortage of gas oil and fuel oil of 1.5 million tons each.

Statistics:

• Russian crude exports reached 72.52 million metric tons in the first seven months of the year, a rise of 7.6 million tons compared to the same period last year.
• Crude exported under federal programs amounted to 916,000 tons in July, while the third quarter state-needs allocation runs at 4.5 million tons.
• Non-repatriation of hard currency earnings from crude and products amounted to a staggering $283 million in the first seven months of the year.
• The government proposes increasing export duties on crude and fuel oil to 27 euros/ton and introducing export quotas on fuel oil beginning with September.

Sources:

• "Russian Energy Ministry to be Given Free Hand on Fuel Oil Export Quotas" by Natalia August, Nezavisimaya Gazeta, August 3, 2003.
• "Mikhail Kasyanov Appointed Chairman of the Interdepartmental Commission on Access to Export Pipelines" by Aleksandr Kochnev, Kommersant, August 10, 2003.