From: trh@jack.sns.com (Al Trh)
Newsgroups: soc.culture.turkish
Subject: Tatars look West for help in rebuilding oil industry (fwd)
Date: 28 Dec 1992 12:47:25 -0600
Organization: CS Dept, University of Texas at Austin
Reply-To: Turkish Cultural Program List <TRKNWS-L%USCVM.BitNet@pucc.PRINCETON.EDU>
NNTP-Posting-Host: cs.utexas.edu

 Tatars look West for help in rebuilding oil industry

 27 Dec 92

        KAZAN, Russia (UPI) -- No wonder Tatarstan wants independence -- it's
 got oil.
        But oil alone isn't enough, especially when production is dropping,
 equipment is falling apart, fix-it money is lacking, Russia is claiming
 much of the province's crude, and clouds of political and economic
 uncertainty hang over the Tatarstan oil fields.
        In this atmosphere, Western companies are hardly rushing in at
 Tatarstan's invitation to help.
        Tatarstan is a big black blot of crude reservoirs on the map of
 Russia -- a good-sized energy treasure chest pumping money and oil to
 Moscow.
        The self-governing province, about the size of Ireland, covers 27,178
 square miles in central-eastern Russia west of Siberia.
        ``Why should we give our oil product to Moscow?'' asks Farid
 Mukhametshin, the Tatarstan Parliament speaker.
        But not all Tatarstan's oil or its oil earnings go to Moscow. It has
 negotiated itself a cut of the money and the crude. But the Tatar
 republic wants more political and economic clout and oil is fueling that
 drive.
        Oil is a steady undercurrent in the ongoing political debates between
 Kazan, the Tatar capital, and Moscow.
        Moscow wants Kazan to keep the oil tap open; Kazan wants Moscow to
 loosen the political reins. It seems certain, however, that Tatarstan
 would use greater political and economic freedom to assert greater
 control over its oil.
        While Moscow and Kazan keep their unresolved political tiff polite,
 Tatarstan is trying to build up its oil industry, oil revenues, oil
 reputation and oil links to the West.
        With that aim in mind, Kazan hosted Tatarstan's first oil and gas
 trade fair and congress, but the weeklong event ended with a whimper
 last month.
        Sixty mostly mid-size oil field companies from a dozen countries set
 up exhibits at the trade fair, where 200 had been expected. But if the
 multinational oil giants were present, they were invisible. While
 sponsors puffed up the event as the country's most important oil fair
 this year, even Russia gave it a cold shoulder, sending a deputy
 minister and a few middle management bureaucrats.
        ``I don't think the absence of British Petroleum and other big
 companies can be explained by political reasons,'' said Tatarstan Vice
 Premier Valery Stekolshchikov.
        He said Tatar oil enterprises were signing up Western partners to
 boost production, reduce industry pollution, obtain new investments and
 explore the problem of extracting heavy oil.
        Kazan Deputy Mayor Rachid Faschujdinov was annoyed that the Russian
 Federation sat out the trade fair, but he consoled himself by saying the
 event had some good side effects.
        ``You can see we repaired roads and cleaned up,'' he said.
        One of the German organizers of the oil conclave, Jens Scheumann,
 shrugged off the criticism. He said he doubted that Tatarstan political
 strivings scared anyone away and boasted that Kazan did well in its
 first international outing. Scheumann predicted the next oil congress
 and fair, scheduled for next autumn, would be bigger.
        For years the Soviet Union was the world's largest oil producer, with
 the Russian republic pumping the bulk of Soviet oil with heavy
 contributions from Tatarstan. Moreover, nearly half of the oil produced
 elsewhere in Russia, such as from Siberia's rich Tyumen fields, passes
 through strategically located Tatarstan, making it central to the
 Russian oil industry.
        With the breakup of the Soviet Union, Moscow lost the oil pumped in
 the republic of Azerbaijan, the promise of production in Kazakhstan, new
 discoveries in Uzbekistan and Turkmenistan's modest but steady oil and
 gas output. Moscow's loss was a gain for each of these newly independent
 republics, a gain that did not go unnoticed in Kazan.
        But Moscow has been witnessing a drop in Russian production. Russian
 wells, pumping stations and oil fields are in disrepair. And Russian
 Deputy Energy Minister Andrei Konoplyanik told the Kazan conference that
 Moscow realizes the need to stabilize the industry with help from
 Western companies.
        Russia needs $70 billion pumped into its oil industry, Konoplyanik
 said.
        Tatarstan production, like output from the rest of Russia, has
 plunged. But Rinat Galeyev, president of Tatneft, the Tatarstan oil
 company, told the conference that next year will bring better times.
        Introduction of new Western technology could boost Tatarstan's
 lagging production by 10 million tons next year to more than 40 million
> tons, or about 270 million barrels, Galeyev said. Tatarstan sits on
 known formations and new drilling is expected to identify additional
 commercial deposits.
        Russian oil ministry official Viktor Ott said Russia can expect
 production to rise by 8 million tons in 1993 above this year's
 anticipated 396 million tons. A metric ton of crude oil is equal to
 about seven barrels.
        If both predictions prove correct, that means stepped-up Tatarstan
 production would account for all of Russia's increase and output from
 elsewhere would continue to fall.
        But these are only predictions, designed perhaps to build the
 confidence of outside investors more than to describe a real rise in
 production.
        Since the old Soviet oil bloc opened its doors to the West, major oil
 companies have shown interest in developing Russia's European arctic,
 Siberia, Sakhalin Island waters north of Japan, Kazakhstan and
 Azerbaijan. But if the Kazan oil fair and its mostly unrequited
 invitations for help are any indication, Tatarstan is going to have to
 work harder to boost production and pump up Western interest.
        To earn cash for sophisticated technology needed to increase
 production, Tatarstan will export 6 million tons of crude by the end of
 the year -- with the tacit consent of Moscow, which already is scraping
 the bottom of the barrel to export every last drop of crude not needed
 domestically.
        ``Russia takes our oil, but this is a matter of bilateral agreement,''
 Parliament Speaker Mukhametshin said.
        Tatarstan keeps some oil for local use and Moscow controls the rest.
 Kazan gets its oil export earnings, but complains that Moscow wants to
 increase its cut of quarterly ``tax'' payments from Kazan.
        Political questions aside, Tatarstan faces hard work in rebuilding
 its oil industry to the point where it will be able to get more leverage
 with Moscow.
        ``The main part of our equipment is really old,'' said Rifkat
 Sakhabutdinov, Tatneft laboratory chief, who is nostalgic for the '60s
 and '70s when Tatarstan produced most of Russia's oil.
        Tatneft has found a partial solution to its problems in Tatex, a
 joint venture formed with Texneft, a subsidiary of Texas-based Global
 Natural Resources.
        Texneft provides the Tatex joint venture with a vapor recovery system
 that allows Tatarstan to reduce pollution by capturing oil vapors and
 turning them into usable crude. In exchange, the Texas partner gets oil,
 which is as good as cash.
        As long as the Russian ruble cannot be converted on world markets, it
 is useless, forcing Tatarstan and Russia to use dollars earned from oil
 sales to buy new equipment.
        Despite high hopes, optimistic predictions and reports of joint
 ventures in the making, the Kazan trade fair found representatives of
 some Tatar oil industry-related companies go wanting.
        Viktor Prokoyev, whose Kazan company makes compressors for the oil
 industry and employs 6,000 workers in research and manufacturing, came
 looking for Western partners as a cure-all for its hard times but was
 unable to say much more than ``we're trying to make contacts.''
        If Tatarstan and its oil sector hope to translate contacts into hard
 currency, they must be able to provide sound rewards with reasonable
 security from politcal risks.
        Russian President Boris Yeltsin recently issued a decree ordering the
 reorganization of the state oil industry in an effort to restore
 efficiency. But oil will not immediately be included in the Russian
 privatization program, which is just beginning to take hold in the rest
 of Soviet industry.
        Tatarstan, whose ex-communist leaders have been slow to embrace
 privatization, envisions auctions to make its oil sector private. But
 the government has not said when it might hold those auctions.
        With all the changes and attempts at change in Tatarstan's political,
 economic and petroleum fields, some things remain the same, such as the
 glorious signs extolling Tatarstan energy and its workers.
        An aging Soviet-flavored slogan still prominently displayed in Kazan
 declares, ``Glory to Tatar oil workers.''
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