Transcript Pan-European Institute

Shipments of Russian Oil via
the Baltic Sea:
A source of integration or disintegration in Europe?
Prof. Kari Liuhto
Director
Pan-European Institute (PEI)
Turku School of Economics and B. A.
www.tukkk.fi/pei/e
Nelijärve
22.5.2004
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Pan-European Institute
(PEI)
PEI was founded in 1998, when two
institutes were merged:
- Institute for East-West Trade (est. 1987)
- Institute for European Studies (est. 1989)
PEI is one of the leading academic research
centres in its field in Northern Europe
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Core Activities
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PEI conducts high-quality academic and
applied research
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PEI monitors economic development in
the Baltic Sea Rim and Russia
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PEI provides education and training
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PEI carries out projects funded by
several organisations
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Research Focus
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Economic and business development in the
Baltic Sea region
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Economic relations between the EU and Russia
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FDI inflow and outflow from Russia
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Regional development in Wider Europe
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SME development in eastern regions of the EU
and countries bordering the Union in the East
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Economic Monitoring

Currently PEI executes three monitoring
activities:
– Bimonthly review on the Baltic States and
Poland
– Biannual review on the Kaliningrad region
– Weekly business reporting concerning the
Kaliningrad region and St. Petersburg
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New monitoring activity concerning
Russia will be introduced in June 2004
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The role of the PEI in providing
economic information
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Operation philosophy:
Objective (neutral)
Transparent (website)
Fast (electronic mailing)
Free of charge (most of services)
Events (high-level conferences)
Frequent (several monitoring activities)
Education and training (academic and applied inhouse)
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Development of Russian
economy (GDP)
GDP 2003 was $ 434 bn (MP) or $ 1450 bn (PPP)
a third of the growth due to high oil price in 2003
10
8
6,4
6
4
%
2
0
-2
96
97
98
99
0
1
2
3
4e
5-7e
-4
-6
-8
Sources: Bank of Finland
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Russia’s Foreign Trade
(EU25 accounts for ~ 50%)
160
134
140
120
105
$ billion
100
90
81
80
60
68
54
43
107
87
72
61
60
44
68
102
74
76
75
61
58
54
51
40
45
40
20
0
92
93
94
95
96
97
Exports
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98
99
0
1
2
Imports
Source: Bank of Finland
3
Russia’s export structure
in 2003
Others
18 %
Crude oil and
products
40 %
Chemicals
7%
Machinery &
transport equipment
9%
Basic metals
11 %
Natural gas
15 %
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Source: Bank of Finland
Russia – an oil economy
*
*
*
*
*
reserves 5-10% of world (P/R-ratio 22)
oil and gas ~ 25% of GDP (WP)
over 50% of extracted oil exported
2nd largest exporter of oil in the world
over 50% of Russia’s oil exports arrive
in the EU
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Russian oil producers in 2004
Others
10 %
Bashneft
3 %
Yukos
19 %
Slavneft
5 %
Rosneft
5 %
Tatneft
5 %
Lukoil
18 %
Sibneft
8 %
Surgutneftegaz
12 %
TNK-BP
15 %
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Source: Troika Dialog
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Source: EU
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Source: EU
Russia’s crude exports in 2002
Railw ay
3 %
Druzhba
pipeline
39 %
Sea
transportation
58 %
Source: Russian Petroleum Investor
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Oil transportation in the
Gulf of Finland
120
Million
tonnes
Tallinn
100
Vysotsk
80
Batareynaja
60
St.Petersburg
Primorsk
40
Porvoo
20
0
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
Source: SYKE (2003)
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Some oil terminals in the
Russia territory of the Baltic
Sea Rim
Primorsk
St. Petersburg
Bukhta Batareinaya
Vysotsk
Vyborg
Ust-Luga
Vistino
Kaliningrad
Planned capacity
up to 70 mt (by the end of the decade)
16 mt (by 2005-2006)
6-15 mt (by the end of 2004)
5-11 mt (by the end of 2004)
1 mt (extension open)
5-6 mt (by 2010)
up to 10 mt
up to 10 mt
By the end of the decade, probably over 100 million tonnes
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Conclusion
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Russian oil shipments via the BS grow (risks grow)
(Murmansk pipe uncertain – Arkangelsk port ?)
Safety and stricter control measures needed
(VTMIS, double-hulled ships, on spot sanctions)
Public awareness in Russia should be influenced
Closer EU-Russian co-operation required
Team play among Baltic countries
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Epilogue
Russian oil is a source of integration in Europe,
if it does not represent an environmental threat
in the Baltic Sea or elsewhere
and
if it is not used as a political instrument to
obtain conservative goals of Russian foreign
policy.
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