U.S. Works Toward Securing Russian Oil Resources

WASHINGTON, DC, July 23, 2003 (ENS) - The U.S. Overseas Private Investment Corporation (OPIC), a government agency, has approved a $130 million loan guaranty for the construction of an oil products export terminal on Russia's Vysotsky Island, which is on the Gulf of Finland north of St. Petersburg.

The guaranty, and this week's visit of U.S. energy officials to Murmansk in Russia's north, are the result of an energy dialogue begun last year between the two countries to connect the American and Russian energy markets.

The guaranty was made to HBK Fund LP of Dallas, Texas, for a loan the fund will make to an indirect subsidiary of OAO LUKOIL, the leading oil producer in the Russian Federation.

The financing will cover the first two phases of the project including construction of rail links and upgrades, two tank farms and a marine jetty, and dredging in the Gulf of Finland to permit large oil ships to pass.

OPIC President and CEO Dr. Peter Watson (Photo courtesy OPIC)

LUKOIL has one of the largest petroleum reserve bases among private oil companies worldwide, nearly 17 billion barrels of oil equivalent as of early 2002, and is one of the largest crude oil producers in Russia.

In preparation for the second Russian-U.S. energy summit set for September, U.S. energy officials arrived in Murmansk Tuesday. Energy officials from the two countries held their first commercial energy summit in Houston, Texas last October.

At the second energy summit planned for St. Petersburg, the United States will be looking for an increase in supplies of Russian oil and gas. To that end, the U.S. energy officials in Murmansk will discuss projected sales and delivery of large amounts of oil and gas with their Russian counterparts.

RIA Novosti reported that the U.S. delegation includes Deputy Secretary of Energy Kyle McSlarrow and Deputy Secretary of Commerce Sam Bodman, as well as representatives of the U.S. State Department.

Deputy Secretary of Energy Kyle McSlarrow (Photo courtesy the White House)

Talks in Murmansk covered projected contracts on the import of Russian fuels into the United States, and the possibility of U.S. investment in the construction of an oil link between West Siberia and Murmansk, the largest seaport in the Russian north.

In April, the Russian government approved the construction of the 1,500 kilometer (930 mile) pipeline, which would connect the existing Russian network in western Siberia to Murmansk. Energy Minister Igor Yusufov has said the planned pipeline could be operational by 2009.

The new pipeline is planned to have an initial capacity of 80 million metric tons of crude oil a year, which would increase to 120 million metric tons.