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Buying Russian crude

October 1, 2004, 10:10 CEST

Statoil has concluded its first-ever deal to buy and sell Russian oil with an agreement to purchase part of the crude produced by the OJSC Surgutneftegas company.

For strategic reasons, neither side wishes to reveal the volume involved, the price being paid or the duration of the contract.

“This deal means that both we and Surgutneftegas will be able to reach more – and different – customers,” says Geir Heitmann, head of Statoil’s crude oil trading department in Stavanger.

“The sharp expansion in Russian crude production over recent years means that the country’s export pattern has become increasingly similar to Norway’s.

“But exports from Russia via the Baltic face logistical restrictions, including the water depths found in the Danish Belts.”

He explains that Statoil will be re-exporting Russian crude together with Norwegian oil from its large terminal at Mongstad near Bergen.

“This will allow us to put together combinations of cargoes tailored for specific customers, a service which is in growing demand and which few others can offer.”

Russian oil is increasingly being exported to North America and Asian markets where Statoil already has a solid foothold, Mr Heitmann notes.

“With crude production set to continue expanding in Russia, these markets will become ever more important.”

Statoil will be buying and marketing crude volumes piped from western Siberia to the Primorsk oil terminal on the Gulf of Finland, north of St Petersburg.

Deliveries are due to begin this autumn from Surgutneftegas, one of Russia’s largest privately-owned oil companies with a daily production of more than a million barrels of oil.

Most of this output derives from fields around the town of Surgut in the central region of western Siberia, where the company has its head office.

Surgutneftegas accounts for about 13 per cent of total Russian oil production.