Latvia losing out as oil export route?

Jan 20, 2000

Some 14.0 million tons of Russian crude oil and refined oil products
were exported through the port of Tallinn last year, up by nearly
one-third from 1998.

And Tallinn beat out Ventspils in export of refined oil products last
year. Some 11.6 million tons of Russian oil products were exported
through Tallinn last year, while 11.3 million tons went through
Ventspils.

Ventspils' focus has been more on crude oil than oil products.

Ventspils' ice-free port still remains the undisputed overall leader
among Baltic ports as the 13 million tons of crude delivered by
pipeline last year gave it a total turnover of 24.3 million tons.
Ventspils still handles some 11 percent of Russian crude oil exports,
making it one of the key northwestern European export routes.

But Tallinn's rapid emergence is an indication of the increased
competition in the oil export market.

And in their scramble to gain a bigger slice of Russian oil exports
the Baltic states may have unwittingly given Moscow more influence
over the region as it can now divert the flow of oil to suit its
political and economic aims, warn analysts.

"Russia has many more export options than it did two or three years
ago," said Julian Lee of the London-based Centre for Global Energy
Studies. "They can use this leverage to force down tariffs and to
play political games."

Given the Baltic states' stated aim of joining the European Union and
NATO, this increased potential for meddling from Moscow is an
unwelcome development.

The most striking example of Russians' ability to manipulate oil
exports was the repeated closure last year of Lithuania's Mazeikiai
oil refinery due to a lack of oil supplies. Russian oil giant LUKoil
had warned publicly that the refinery would have trouble securing
supplies if it was not allowed to buy a stake in the refinery, but
Lithuania went ahead and sold a one-third strategic stake to the US
oil company Williams International.

The refinery received only 4.6 million metric tons of crude oil last
year, a33 percent drop, and is likely to post a loss of 50 million
dollars.

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