Shipments of Russian Oil via the Baltic Sea: A source of integration or disintegration in Europe?

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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

• PEI conducts high-quality academic and applied
  research
• PEI monitors economic development in the Baltic
  Sea Rim and Russia
• PEI provides education and training
• PEI carries out projects funded by several
  organisations

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Research Focus

• Economic and business development in the Baltic
  Sea region
• Economic relations between the EU and Russia
• FDI inflow and outflow from Russia
• Regional development in Wider Europe
• 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
• New monitoring activity concerning Russia will be
  introduced in June 2004

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The role of the PEI in providing economic
information

• 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
  in-house)
• Visit -gt http//www.tukkk.fi/pei/e

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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
Sources Bank of Finland
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Russias Foreign Trade(EU25 accounts for 50)
Source Bank of Finland
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Russias export structure in 2003
Source Bank of Finland
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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 Russias oil exports arrive in
  the EU

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Russian oil producers in 2004
Source Troika Dialog
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Source EU
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Source EU
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Russias crude exports in 2002
Source Russian Petroleum Investor
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(No Transcript)
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Oil transportation in the Gulf of Finland
Source SYKE (2003)
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Some oil terminals in the Russia territory of the
Baltic Sea Rim

• Planned capacity
• Primorsk up to 70 mt (by the end of the
  decade)
• St. Petersburg 16 mt (by 2005-2006)
• Bukhta Batareinaya 6-15 mt (by the end of 2004)
• Vysotsk 5-11 mt (by the end of 2004)
• Vyborg 1 mt (extension open)
• Ust-Luga 5-6 mt (by 2010)
• Vistino up to 10 mt
• Kaliningrad up to 10 mt
• By the end of the decade, probably over 100
  million tonnes

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Conclusion

• 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.