Yukos
(Russia's second largest oil firm) intends to increase output by 20%
this year. Surgut will raise its production by 14%.
Last week, Russia halved export duties on fuel oil. Export duties on
lighter energy products, including gas, were cut in January. As opposed
to previous years, no new export quotas were set. Clearly, Russia is
worried about its surplus and wishes to amortize it through enhanced
exports.
Russia also squandered its oil windfall and used it to postpone the
much needed restructuring of other sectors in the economy - notably the
wasteful industrial sector and the corrupt and archaic financial
system. Even the much vaunted plans to break apart the venal and
inefficient natural gas and electricity monopolies and to come up with
a new production sharing regime have gone nowhere (though some pipeline
capacity has been made available to Gazprom's competitors).
Both Russia's tax revenues and its export proceeds (and hence its
foreign exchange reserves and its ability to service its monstrous and
oft-rescheduled $158 billion in foreign debt) are heavily dependent on
income from the sale of energy products in global markets.
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