"High oil prices have breathed new life into the Caspian Sea hydrocarbon sector," he told the conference, "Caspian Sea Oil and Gas-2004," held in Baku. Viktor Kalyuzhny stressed that "in this situation not everyone is able to keep a sober mind and refrain from falling into the state of euphoria."
Noting that precisely these sentiments took the upper hand in Russia during the elaboration of the energy strategy, Viktor Kalyuzhny pointed out that "the bias towards exports can deplete the domestic market and seriously affect national consumers - from large industrialists to ordinary motorists."
"It is hardly possible to consider as normal the situation where crude oil goes abroad while domestic refineries operate at much lower capacity," the deputy foreign minister stressed. "It is also necessary to add to this the declining real reserves combined with the absence of a program for the replenishment of the mineral base," he said.
Special envoys of the Russian President for the Caspian Sea issues pointed to the timely nature of the warning that "the favorable oil price situation is a serious test for Russia."
Viktor Kalyuzhny believes that the balance, which has emerged between the Caspian Sea countries and foreign energy companies, fails to take into account the national interests of these countries and the observance of the mutual benefit principle.
"The balance, which exists today, can hardly be viewed as a good example of considering the national interests of the Caspian Sea states and observing the mutual benefit principle," he said.
Viktor Kalyuzhny told the conference that "in some states over 80% of their hydrocarbon resources have been placed under the control of foreign business."
According to him, "errors were made both during the adoption of laws and the conclusion of contracts." In particular, the imperfect tax legislation in Russia in the early 1990s "contributed to the excessive bias towards production sharing agreements, which Russia regarded almost as a sole reliable tool to attract foreign investments," Viktor Kalyuzhny said.
"I believe that foreign companies, which are interested in their long-term operations in the Caspian Sea region, should treat with understanding the fact that Russia is rethinking the realities and parameters of cooperation. They should build more balanced relations with the littoral states and perceive normally the natural process of bringing down the originally excessive yields to generally-accepted standards," Viktor Kalyuzhny concluded.
