ST. PETERSBURG, June 8 (RIA Novosti) - Russia's economics ministry, the St. Petersburg mayor's office and the New York Mercantile Exchange signed an agreement Friday to establish an international mercantile exchange in Russia's second city.
Russia's president said in his last year's state of the nation address to parliament that Russia, as a leading oil exporting nation, should establish its own oil exchange to trade crude and petroleum products in rubles.
In line with the president's instructions, Russian Prime Minister Mikhail Fradkov signed Friday a resolution on the launch of oil and petroleum product trading in Russia from August 1.
The economics ministry said earlier this week that trading in the Russian Export Blend Crude Oil (REBCO) futures would move from the New York Mercantile Exchange (NYMEX) to a new commodity market in St. Petersburg.
"Trading in the REBCO futures will move to St. Petersburg as soon as we register the new commodity exchange," Deputy Economics Minister Kirill Androsov said.
The new blend, the third crude brand currently trading on the NYMEX, after WTI and Brent, is expected to replace Urals as Russia's price index used for calculating supply prices, export duties and mineral extraction tax.
REBCO is expected to fetch a higher price than Urals, generally priced at a $5-6/bbl discount to Brent, as its quality is much nearer to Western standards.
At the same time, Russian Economics Minister German Gref said Friday that trading in REBCO futures on the St. Petersburg mercantile exchange would start in the second half of 2007.
Gref said the new bourse in St. Petersburg is expected to launch trading in petroleum products at the first stage, crude at the second stage and energy products at the third stage.
Gref said the Russian economy was losing at least $4 billion a year from the difference between Urals and Brent blends and trading in REBCO on the St. Petersburg mercantile exchange would narrow this spread.