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Petroleum industry

US-Russia Energy Dialogue: Mixed Signals and Changing Dynamics

Strategic Insights

— 1 min read

US Secretary of State Colin Powell visited Moscow, reaffirming friendly ties between the two nations, but Russia is sending mixed signals about the future of the US-Russia energy dialogue. Russia's ambitions to capture 10% of the US crude market appear to have lost momentum, as the Kremlin focuses on internal matters. Despite this, Russian oil majors are pressing forward with their own projects, which could revive Russian oil shipments to the US.

Key Takeaways:

  • Russia's drive to capture 10% of the US crude market has lost its political impetus, with no Russian oil arriving in the US in November after a flurry of imports over the summer.
  • Data from the US Energy Information Administration (EIA) show that Russian deliveries to the US peaked at nearly 500,000 barrels per day in July 2003 and then fizzled out.
  • Russian oil majors, such as Lukoil, are taking matters into their own hands, doubling the size of their retail network in the US Northeast and planning to supply it with shipments from their soon-to-be opened terminal in Vysotsk.
  • Opportunities for oil supplies to the US could also arise when Rosneft opens a VLCC floating storage vessel at Murmansk next month.
  • The more ambitious project of building a crude pipeline to Murmansk from West Siberia has lost steam due to the imprisonment of former Yukos CEO Mikhail Khodorkovsky.
  • Powell offered a friendly gesture to Moscow with reassurances that the US did not intend to set up military bases in Georgia and that Russian oil companies would have the chance to work in Iraq.
  • Analysts say that the US has been preoccupied with Iraq and has taken its eye off the former Soviet Union, enabling Russia to flex its muscles again in the Caspian region.

Statistics:

  • 0: The number of barrels of Russian oil exported to the US in November 2003.
  • 500,000: The peak barrels per day of Russian deliveries to the US in July 2003.
  • 160,000: The average barrels per day of Russian crude imports to the US in the first 11 months of 2003.
  • 10%: Russia's target market share in the US crude market.
  • 85,000: The average barrels per day of Russian crude imports to the US in 2002.
  • 4-6: The number of months between Urs' shipments to the US in June and July 2003.

Sources:

  • US Energy Information Administration (EIA)
  • Nefte Compass (NC)
  • The Economist (no date)

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