Media Press

IN 2003 THE SOCAR PRODUCED 8.924 MM TONS OF OIL

BAKU.05.01.2004.MEDIA-PRESS: In 2004 the State Oil Company of Azerbaijan and the JC founded with its sharing produced 8.924 MM tons of oil and this is by 1.4% or 124.7 thou tons more than by plans. As Media-Press has been informed in the SOCAR, its companies produced 8.064 MM tons (a growth by 0.2%), the JC produced 861.3 thou tons (a growth by 14.8%).
On December 746.9 thou tons of oil were produced and it is larger by 0.4 thou tons or 0.1% than it was planned. The oil production enterprises produced 669.7 thou tons and the joint enterprises - 77.2 thou tons.
In accordance with the predictions, in 2004 the oil production in Azerbaijan would make 15.45 MM tons and the SOCAR should produce 8.75 MM tons and the Azerbaijan International Operating Company would produce 6.7 MM tons. 9.2 MM tons of oil from this oil volume would be delivered to the export. 6.7 MM tons of oil would be pumped by the pipeline Baku - Supsaa and 2.5 MM tons - by the route Baku - Novorossiysk.

5.167 CUBIC METERS OF THE NATURAL GAS WERE PRODUCED IN AZERBAIJAN DURING 2003

BAKU.05.01.2004.MEDIA-PRESS: By the results of 2003, the production of the natural gas in Azerbaijan make 5.167 bn cubic metersa and this is by 2.9% more than it has been planned.
As Media-Press has been informed in the State Oil Company of Azerbaijan, the companies of the SOCAR produced 4.152 bn cubic meters of gas, and the Azerbaijan International Operating Company (AIOC) produced 1.015 bn cubic meters. The joint companies produced 114.2 MM cubic meters of gas.
On December the gas production made 440 MM cubic meters and this is by 3.2% or 13.6 MM cubic meters of gas higher than by plan. The SOCAR has produced 354.5 MM cubic meters of them and the AIOC produced 85.5 MM cubic meters. The joint enterprises produced 12.6 MM cubic meters of gas.
For satisfying the demands of Azerbaijan up to 10 bn cubic meters of gas are required annually. In the past year Azerbaijan has purchased 4 bn cubic meters of "the blue fuel" from the international group of companies "Itera". The gas import of "Itera" would make the same total in this year too. Else one agreement with "Itera" has been signed; it provides delivery of 1.5 bn cubic meters of gas to the JC "Azerigaz". However, this contract for the present has not been for lack of necessary means of Azerbaijan.
The republic will receive the subsidiary volumes of gas also since within the frameworks of the project of extension of the Sangachal oil terminal the gas drying installation will be installed. Today all oil delivered to the terminal is separated from water and gas. Received gas is liquated. The construction of new installation would not allow liquating gas, but delivering it to the State Oil Company of Azerbaijan, which in its turn will deliver it to consumers. Gas will be burned in flames only in emergencies. For realization of this idea the SOCAR also plans to build special gas receiving installation and the pipeline up to the Sangachal gas distribution point.

IN 2003 THE MEO OF THE SOCAR EXPORTED 2.482 MM TONS OF OIL AND 789.8 THOU TONS OF OIL PRODUCTS

BAKU.05.01.2004.MEDIA-PRESS: In 2003 the Marketing and Economic Operations Office of the State Oil Company of Azerbaijan exported 789.836 thou tons of oil products.
As Media-Press has been informed in the SOCAR, the diesel fuel made the most volume of the export. 400.269 thou tons of it was delivered to the foreign purchasers. 252.522 thou tons of the car benzene, 122,497 thou tons of aicraft kerosene, 10.068 thou tons of butane, and 4.481 thou tons of the furnace fuel were realized in the foreign markets.
In comparison with the rates of 2002 the export of the oil products reduced by 115.3 thou tons mainly in account of oil coke export stop and reduction of aircraft kerosene export by 70 thou tons, Above 70 thou tons of koke were exported to abroad.
In 2003 the SOCAR exported 2.482 MM tons of oil by the pipeline Baku - Novorossiysk.
The pipeline Baku - Novorossiysk was put into operation on October 25, 1997 and the SOCAR exports annually about 2.5 MM tons of oil by it. The plans of pumping for this year remain the same. In accordance with the intergovernmental agreement between Russia and Azerbaijan signed on January 1999 it is automatically prolonged every year if one of the parties does not inform another one before half a year up to expiry about intension of its denouncement. In every five years the sides may make changes in the agreement by mutual agreeing.
We shall remind that several years ago the Vice-Premier Mr. V. Khristenko raised again the issue of desirability of increasing the transit of the Azerbaijan oil by the route Baku - Novorossiysk. However, in the next future something will scarcely change, though the sides had agreed to discuss this matter again a level of the experts. The point is that there is not a free oil of the SOCAR for the pipeline Baku - Novorossiysk. Moreover, it is unprofitable for Azerbaijan to grow the exportation by this route. The rate for pumping by this route makes $15.67 for a ton. (For the comparison: rate for transit of the Azerbaijan oil by the pipeline Baku - Supsa makes $2.7 for a ton). Moreover, Azerbaijan looses not few money from mixing its light oil with less quality Russian oil of "Urals" mark.

THE NEW PRESIDENT OF THE OPEC IS TROUBLED BY HIGH PRICES FOR OIL

BAKU.05.01.2004.MEDIA-PRESS: Since January 2004 the new president of the OPEC, the Minister of the Energy and Mineral Resources of Indonezia Mr. Purnomo Yusdgiantoro executes as well the duties of the General Secretary of the cartel. Ministries of Oil from the countries entering into the OPEC took this decision on the 128th out of turn conference on December 4, 2003 in Vienna, where Mr. P.Yusgiantoro was elected the President.
He would execute the duties of the General Secretary until the OPEC elect the new general secretary of the cartel. As the Chief of the Mass-media Department of the Secretariat of the OPEC in Vienna Mr. Abdurakhman al-Khareydzi has informed the Agency of the oil information, this would occur possibly during several months in one of the next conferences of the OPEC.
The oil ministries of the countries- members of the OPEC plan to hold meetings on February 10 in Algeria, March 31 in Vienna and June 3 in Beirut.
Earlier Mr. Alvaro Silva Kalderon, the former Minister of Energy of Venezuela occupied the post of the General Secretary of the OPEC.
The new President of the OPEC expressed his trouble on the growth in prices for oil. Mr. P. Yusgiantoro thinks that the "present prices are too high". At the same time he believes that by the end of January they would fall down.
If the prices for oil overcome the ranges of $22 - 28 for one barrel during the current month, the consultations with all ministers of oil and energy of the states-members of the cartel would be held".

IRAN LAUNCHED THE FIRST NATIVE SELF-LIFTING FLOATING DRILLING RIG

BAKU.05.01.2004.MEDIA-PRESS: In the Iranian town Bender-Abbas the launching of the first self-lifting floating drilling rig for 6th turn of the gas project "South Pars" has been hold. Here serial production of the FDR for offshore oil and gas fields has been adjusted and the construction of the FDI for 6, 7, 8 turns of the project on the development of the largest offshore gas field "The South Pars" is conducted.
The height of the first FDI (together with the drilling rig) makes 67 m, the weight - 1550 t. In the next days its towing to the area of the field "The South Pars", which is situated in 540 km from Bender-Abbas would start. After delivering of the SFDR to its place else 15 days would be required for its fixing in the bottom by means of special columns. A sea depth in this region makes about 61 m.
In 6, 7 and 8th stages of the realization of the project production of 107 MM cubic meters of the natural gas would be provided. It would be delivered to the field "Aga Jari" in the province Huzestan for pumping into the oil wells in purposes of their productivity improvement. Moreover, during the course of the realization of the mentioned stages of the development of the "South Pars" 120 thou bbl of gas condensate would be produced daily and 1.2 MM tons of liquid oil gas annually.
The Iranian company "Petropars" has been obliged for the development for 6 - 8 turns of "The South Pars" in accordance with the $5 bn governmental contract signed with it. According to the contract the company "Petropars" has a right to attract foreign companies to the realization of this project as consultants and contractors. At the present time the Norwegian company Statoil is the main contractor on providing the offshore gas production in these turns.
Putting into operation of the 6, 7, and 8th turns of the "Southern Pars" would take place in 2006 by the plan.

THE MINISTRY OF TAXES OF AZERBAIJAN HAS PROVIDED 4.112 TRLN MANATS OF THE BUDGET EARNINGS

BAKU.05.01.2004.MEDIA-PRESS: In accordance with the preliminary data of the Ministry of Taxes of Azerbaijan, in 2003 the Ministry of Taxes of Azerbaijan transferred 4.1122 trln manats to the state budget of the country.
As Media-Press has been informed in this Ministry, the prediction on the tax transfers for the past year has been executed by 101.2%. In comparison with the rates of 2002, the earnings increased by 21% or 712.5 bn manats. Such results were achieved due to the reforms in the tax system of Azerbaijan. This has brought to the significant improvement of the efficiency in the tax organs activities, ensuring the stable earnings of the budget. The forecasted tasks on the major kinds of taxes and duties were executed with exceeding.

THE OFFICIAL BAKU WOULD CONTINUE THE COOPERATION WITH THE NEW AUTHORITIES OF GEORGIA

BAKU.05.01.2004.MEDIA-PRESS: The official Baku is sure in the continuity of relations with Tbilisi after the completion of elections of the President of Georgia.
"We are sure that the relations between our countries would be developed as well successfully as earlier", - the Chief of the External Relations Department of the Administration of the President of Azerbaijan Mr. Novruz Mamedov has told to the agency "Interfax-Azerbaijan".
The official of the President Administration has noted that the character of the bilateral relations had been determined by common state priorities. "Azerbaijan and Georgia have common political and economic landmarks, our countries are connected with the large regional projects, and there are not any doubts in respect to perspectives of the further cooperation", - Mr. N. Mamedov has emphasized and reminded that and M. Saakashvili announced about the intension of Tbilisi for continuation of more rapprochement with Baku.
In accordance with preliminary data, Mr. M. Saakashvili won in the President Elections in Georgia and gathered above 85% votes of electors, which participated in the elections in the past Sunday.

THE AUTHORITIES OF IRAN INTEND TO TRANSFER THE CAPITAL OF THEIR COUNTRY

BAKU.05.01.2004.MEDIA-PRESS: The Secretary of the Supreme National Security Council of the IRI Mr. Hasan Rouhani has declared that the issue of the transferring of the capital of the Islamic Republic of Iran to another place would be considered at the next sitting of the Security Council of the country.
"At the next sitting we shall seriously put the question on the development of middle-term or long-term project on the transferring of the Iranian capital to another region of the country", - Mr. Rowhani has said.
"By our opinion, the circumstance that Tehran is situated in the seismic active zone and on the line of possible earthquakes, is unsuitable so the capital should be located in another city", - the Secretary of the SNSC.
As RIA "Novosty" has been informed in the International Institute of Earthquakes Studies of Iran, "if an earthquake of 6.5 - 7 points by Richter' scale would emerge, 60% of buildings would be destroyed entirely and 30% be seriously damaged. At the same time, only 10 from 150 large hospitals and medical offices of the Iranian capital had been built by seismic-resistant technology".

MR. DANIEL ERGIN: THE RAPID RETURN OF RUSSIA TO THE OIL WORLD BUSINESS HAS SURPRISED THE WORLD
The famous international expert tells about the situation on the world oil market and the Russia's role.

BAKU.05.01.2004.MEDIA-PRESS: Daniel Ergin is the Chief of the Expert Council, the President of the Cambridge Energy Research Association (CERA). However he is known to all the world as the author of the book "The Prize: The Epic Quest for Oil Money and Power"" In 1993 Mr. Ergin and his colleague Tein Goostavson published the report "Russia in 2010 and what does it mean for all the world". The correspondent of the "Finansoviye Izvestiya" decided to discuss the theme with the author "in the mid of the way".

-Ten years have passed since the publication of the book, which contained models of the Russian development. Does everything go in accordance with plan?

-We based on the changing of the leadership and coming of new forces to authority, which should develop the economy further. Just this occurs in Russia now.

-Your book became "the introduction to Russia" for many investors. I may imagine, what did people say to you in 1998 - 1999.

-But we based on that in the end of 90-s a crisis would take place in the country. Nothing unexpected for readers should emerge. The predictions on the new leader were the same. Working out of similar models is the intellectual challenge. We should account all possible aspects.

-Today all talk about that the growth of prices for oil became the main cause of the turn for the better.

-Not just the fact of the high prices became the fact of high prices, but the mechanism of the movement. Correspondingly, the main question of today is in what degree did the prices for oil affect on the economic growth.

-But what is with the answer to this question.

-Unfortunately, it may be received only in way test - when then prices will fall down.

-There is an opinion that it would never occur. Some analysts affirm that "the global price shift" occurred on the oil market.

-High price for oil is kept already for three years. This is quite clear that talks about the long-term tendency of this have appeared on the market. However, the experience tells about the back - each raising contains element of the next fall or vice versa.

-What prices for oil are optimal for the Russian Government?

-The same ones as for the rest piece are optimal. We may say they would vary within ranges of $20. The producing countries prefer the top of these variations and consumers prefer the down. However the saving of the high prices in the long-term perspective does not enter in the long-term plans of the producing countries. Nobody wishes to ruin the clients.

-And at what level the high "ruining" price may be considered?

-$30 begin already affect on the economy of the counties-consumers. The inhibition returns to the producers.

-How do you estimate the future of the foreign investments to the Russian energy sector?

- The agreement between the TNK and BP became completely new page in the history of the Russian oil industry. This was the powerful message to all the world peace. I think that this is the beginning of the common positive trend, which would bring to the growth in incomes of the government. Of course there are the positive tendencies. However as a whole I was surprised by the interest showed to the oil industry. Especially this has been displayed in comparison with the period 1998 - 1999. Now integration of the Russian and world oil industry occurs.

-The production and the export of the Russian oil grow. How does this relate to the plans of the Russian government on the diversification of the national economy?

-The common strategy course of the Putin's team as well and the other national governments is obvious - to maximize incomes from the oil sales and get reinvesting them to other economic sectors. Unfortunately the historical experience of the similar policy not always impresses. Too many states spent these incomes to no purpose. There is else one problem. The same experience shows that as a rule the governments manage their super-incomes less effectively than the market mechanisms do this.

-Is there possibility that the "nightmare 1998" would recur?

-The combination of two factors played the main role then - availability of large supplies and at the same time reduction of oil demands. The situation would recur possibly in the next year if Russia and Iraq accumulate large supplies, and the world economy would not be able to absorb them. However, we hope that this would not occur.

-What is more important for the true prediction of prices for oil - whether studying the demand by the industrial world or suggestions to the main producers?

-It would be better to start with the GDP - if the world enters into recession, the fall in oil prices would occur. Moreover, the experience of 1998 shows that if only the price falls lower than $20, the oil suppliers begin to show more intension for co-ordination of their actions.

-Have you predictions for the next year as a whole?

-The growth of the production of the countries, which do not enter into the OPEC and returning of Iraq would became the main factors of the market. The main intrigue is in the relations "OPEC - and no the OPEC". Russia would play extremely important role.

-How powerful are the relations between Russia and the oil cartel. What perspectives has this bound?

-Unavoidable cooperation. Almost unavoidable, I would say.

-What will be the future of the OPEC?

-The OPEC was created and works first of all because the states-members have oil fields. Accordingly the private property for oil resources presents the main threat for the OPEC. Two countries threaten the future cartel most of all - Algeria and Nigeria.

-What are your predictions on Iraq?

-They are very conservative. The restoration would occur much slowly and complexly than it was supposed earlier. The absence of the security system, sabotage, the problem of the electric supplying - all they decelerate the restoration. Before the war the experts counted the time, which would be necessary for returning to the level of 1990. Now the conversation is gone about returning to the level of 2002.

- Is the war in Iraq a battle for oil?

-It is for the stability in all the region of the Persian Gulf. This may not be brought to only oil. There has not been a problem of access to the Iraqi oil. Moreover, there are lot of place in the world where sufficient amount of oil would be available. The present war is the second stage of the past war. Just then the oil factor played the more important role. Many feared that Hussein would establish the control at the territory of all the region of the Persian Gulf in the end.

-What events changed significantly the architecture of the world energy market?

-The transformation of Russia to the strategic player on the world piece market is the main thing and almost anybody expected this 4 - 5 years ago. Now this is the recognized factor - the largest companies show the interest to Russia. The transformation of China into the net-importer became else one event. China and India formed new global consumption center. And of course there is else one important event - the appearance of new global energetic good on the market - liquidated natural gas (LNG).

-As to the expressions of the Chief of the Federal Reserve System of the USA Mr. Alan Greenspen, the LNG became the macro-economical factor.

-This is the startling fact. We move now towards to foundation of really global gas market and this would be perfectly impossible to imagine this. And it would be rather logical if to suppose that the countries, which are the main gas suppliers, would organize their own forum for discussion of the gas problems. Russia would become the main world gas supplier including for the both coasts of the United States.

-How the appearance of the new market would affect on the business organizing?

-The uniting of oil and gas businesses would take place and this had began already. The companies in all the world prepare for very serious investments to the gas business. The watch go and for Russia. And it goes very loudly. And if intends to take part into this business, it should hurry.

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