The week's trading on the New York Stock Exchange started with an increase in the price of crude oil with the Western Texas Oil, WTI going for more than 85 dollars a barrel. The price of the Russian Urals crude has also increased to 80 dollars per barrel.
The substantial difference in the prices of the Russian and other world crudes can be explained by the pipeline system, which stretches over a vast territory in Russia. In other words, the Russian pipeline pumps both the Siberian high quality light oil and the Volga oil with high sulfur content. The end result is a mixture which is not liked much on the global market. It's unjust, says Gennady Shmal, president of the Russian Union of oil industrialists:
"Difference in oil prices is possible, but not so big; it should be, say, about one dollar. But the position can hardly be changed under the present pipeline system", complained Shmal.
"Either we install a special oil cleaning device, or build a separate pipeline for the pumping of Siberian oil; a subsidiary of Lukoil is delivering Siberian crude oil to Rotterdam via the North Sea, where it is sold for higher price, because it is of better quality. But the building of a new pipeline in the near future is not possible", said Shmal.
The creation of a Russian oil Exchange could be a solution; it could lead to a ,more just price quotation of the country's oil on the global market, as well as enable the country to reap more gains from growing demand in the world for energy, predicted Shmal.
Europe consumes more Russian oil at the present time and Shmal believes that it will continue like that for a long time to come. What's more, the new Siberia-Pacific Ocean line has been completed and it will enable Russian oil to be sold to Asian Pacific countries, a region which demands ever more crude oil for its industries and for other uses.
Income from crude oil and gas remains the largest contributor to the Russian budget, despite government effort at diversifying the economy. Each dollar earned from the sale of oil helps to improve the standard of living of Russians, meaning that improving the Urals' international reputation will pay rich dividends, advised Shmal.
