Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: TimF who wrote (146941)	5/6/2002 3:41:11 PM
From: TimF	Read Replies (1) \| Respond to of 1575465

Russian Oil and U.S. Security By LEON ARON WASHINGTON — With another oil shock looming thanks to Saddam Hussein's decision to suspend Iraq's oil exports and to the turmoil in Venezuela — not to mention Saudi Arabia's recent, brief waving of "the oil weapon" — the need to broaden the range of America's energy sources has become urgent. One underappreciated source is obvious: Russian oil. Russia is the world's single largest non-OPEC oil exporter, with 10 percent of currently known oil reserves and 9 percent of world output. Yet Russia's irregular, "spot market" deliveries to the United States are a fraction of 1 percent of American imports. By contrast, Iraq's share of American imports last year was 7 percent; between them, Saudi Arabia, Venezuela and Iraq, OPEC members all, accounted for 34 percent. To be less dependent on any one of these sources would help stabilize oil prices and lessen American vulnerability to political blackmail. Americans are not in the habit of looking to Russia for help in enhancing our security. But Russia has been transformed in the last 10 years, and Vladimir Putin's solidarity with the United States since Sept. 11 has sealed that transformation. A decade of privatization of the Russian oil sector has been a success. Since the mid-1990's, Russia's "big six" oil companies have invested an estimated $5 billion in exploration, equipment and rehabilitation of oil fields damaged by Soviet policies. Twenty years ago most experts thought Russia would have to import oil. Instead, it has increased production by 15 percent in the past two years and is poised to pump 11 percent more this year than last. Last February, Russia pumped more oil than Saudi Arabia. At the same time, Russia has striven to create the conditions for private business — domestic and foreign — to thrive. From demilitarization, privatization and de-Bolshevization in the Yeltsin era to last year's flat 13 percent income tax and other pro-business measures, Russia has progressed enormously since the end of the cold war. Moscow has also guarded its freedom to maneuver in oil politics. Through the fall of 2001, Russia resisted OPEC's demand to reduce exports, thus shielding the American and European economies from higher energy costs. The other two leading independent exporters, Mexico and Norway, followed suit. Moscow eventually said it would cut exports by 150,000 barrels a day — but went on to increase production, showing that it remains fully independent of OPEC. Russia is awash in oil, and while Russian companies are busily acquiring assets in Europe, the ultimate prize is America. President Vladimir Putin is likely to raise the issue of Russian oil with President Bush at the summit on May 23 to 25 in Moscow and St. Petersburg. The obstacles to Russian oil exports to America, however, are formidable. The first problem is transport. Russia's major oil fields are thousands of miles away from the deep-water ports that oil tankers require. Getting Russian oil to America's West Coast from terminals on the Pacific Ocean in the Russian Far East — the shortest route — will require spending billions to put in pipelines from western Siberian oilfields and to develop the rich Magadan and Chukotka shelves in the extreme Northeast. Although the Russians can tackle parts of the problem themselves — the state pipeline company Transneft announced last month that it would invest $5 billion in a pipeline from southern Siberia to the Sea of Japan — drilling in eastern Russia and transporting the oil will not be possible without outside investment. Partnership with American oil companies is critical. There have been some joint ventures in recent years: the acquisition in 2000 of Getty Petroleum Marketing by Russia's largest oil company, Lukoil, for example, or Exxon's $4 billion partnership last year with Russian, Japanese and Indian companies for deep-sea drilling around Sakhalin. But American companies remain wary of getting too close to Russian counterparts that only recently abandoned some very unscrupulous business practices, including strong-arming minority shareholders and wresting some of the richest oil fields away from foreign co-owners through corporate shenanigans. American oil companies are perfectly able to gather information and make their own investment decisions. Nonetheless, given our need to broaden our range of energy sources for security reasons, Congress and the White House ought to collaborate on legislation giving tax incentives to American oil companies investing in Russia. In exchange, President Bush should seek the Russian government's commitment to enforcing fairness, transparency and predictability in regulation, taxation and repatriation of profits. The Bush administration should also consider applying some pressure to the European Union. The union's current rule — no more than 30 percent of total E.U. imports can come from a single outside source — greatly hampers Russia's ability to bring more oil to the world market. Even if the Russians were to succeed in getting the capability to reach American oil buyers, there should be no illusions: the displacement of the Persian Gulf in America's energy market is going to be neither total nor swift. Yet a sizable Russian presence in American markets over the next decade will be enough to provide a critical safety margin for energy prices and increase stability in American oil supplies. Leon Aron, director of Russian studies at the American Enterprise Institute, is author of a biography of Boris Yeltsin. nytimes.com

To: TimF who wrote (146941)	5/6/2002 4:34:34 PM
From: tejek	Respond to of 1575465

...A U.S. diplomat in Jakarta told me she had just visited the town of Malang, in East Java, and had seen an Indonesian boy there wearing an Osama bin Laden T-shirt and a New York Yankees cap. So all isn't lost. But we must make sure that he grows into the hat, not the T-shirt. nytimes.com; Tim, this stuff is disturbing. There is so much distrust and misunderstanding on both sides. Its not surprising that Buffet thinks there will be a nuke strike in the US. ted