Key Oil Tariffs Still Split Russia Chechnya

MOSCOW (Reuter)–Russia and its republic of Chechnya remain poles apart on the key issue of oil transport tariffs–oil officials said Wednesday–vastly diluting the impact of a long-awaited agreement signed Tuesday.

Securing the oil pipeline running from the Azeri capital of Baku to Russia’s Black Sea oil export outlet of Novorossiisk via Chechen territory is key to Chechnya’s war-torn economy and to an oil group due to start output from its Caspian fields soon.

Tuesday’s agreement cleared the way for 200,000 metric tons of Azeri oil to get to world markets by the end of the year.

But the absence of a deal on the tariffs Russian oil pipeline monopoly Transneft would pay Chechnya from the start of 1998 means the fate of much bigger volumes from the $8 billion Azerbaijan International Operating Co. is uncertain.

"The question of tariffs next year is undecided–and talks will continue," said Transneft spokesman Alexei Skvartsov.

"Tariffs are one of the biggest problems–and yes–we are a long way from a final solution to this problem."

Emir Gantamirov–Moscow representative of Chechnya’s oil company YUNKO–said Tuesday’s pact was important–because it cleared up all outstanding issues apart from tariffs.

"There were many issues–but now there is just one–thank God," Gantamirov said. "I believe the deal was a big step–because until now there were questions of finance–renovating the pipeline and security. These are now decided."

But the discrepancy is wide between what Chechnya wants and what Transneft is willing to pay for taking oil through the 99 mile Chechen stretch of the pipeline.

"Transneft appear to want to pay ten times less than we want to receive–but our aim is the realistic one," Gantamirov said. "This is what talks are for. It’s normal business."

YUNKO president Khozhakhmed Yarikhanov said in Moscow Tuesday that tariff talks would not be held before December.

Meanwhile Russian officials warned on Wednesday that Chechnya would lose out on an oil transportation deal if it failed to introduce stability at home.

Itar-Tass news agency quoted First Deputy Prime Minister Boris Nemtsov condemning an attack on a bus carrying Russian construction workers on the Dagestan-Chechnya border in which two workers were hurt–according to preliminary reports.

In Tuesday’s agreement Chechnya guaranteed the safety of Russian workers on its territory to repair the damaged pipeline.

"Not one person must suffer–and the Chechen authorities must understand this," Nemtsov was quoted as saying. "We will not repair the pipeline at the cost of losing lives."

Transneft said it may not carry oil across Chechnya at all–even if the route is ready and a pact on tariffs is reached.

"Even if the pipeline through Chechnya is ready and the question of tariffs is resolved–there is the question of political stability to consider," Transneft’s Skvartsov said.

"Alternative routes have advantages in terms of political stability while moving oil across Chechnya is advantageous on an economic level."

He echoed statemen’s by Nemtsov that Transneft had eight options for getting oil to world markets.

One possibility being considered is to deliver "early" Caspian oil to Russian refineries in the Volga region and make Russian crude available at Novorossiisk in a kind of "swap."

Transneft is obliged to carry oil in 1997 and 1998 from Azerbaijan and the AIOC consortium.

AIOC–led by the British Petroleum -Statoil alliance–plans to produce 40-50,000 metric tons of oil this year which it wants to get to the Black Sea.

It expects to boost output from its vast Caspian offshore oil fields to 1.5 million metric tons (30,000 barrels per day) next year–and to a peak of 700-800,000 bpd in five to ten years.

A second existing pipeline from Baku to Georgia’s Black Sea port is expected to be ready by late 1998–but a new route will have to be constructed to cope with the consortium’s main oil.


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