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    YURI SHAFRANIK: RUSSIA MUST INVEST IN OIL PROJECTS

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    MOSCOW, May 20 (RIA Novosti) - The main need for Russia is investment in the oil and gas sphere. This is the opinion voiced at a RIA Novosti press conference by Yuri Shafranik, the chairman of the Council of the Russian Union of Oil and Gas Industrialists. He believes that "investment projects have to be addressed regardless of what the prices for oil are." The desire to take advantage of the growth of prices and earn money on that is natural, he said. In Shafranik's words, Moscow uses high prices to return to those European markets that were lost for it after the collapse of the USSR and taken by OPEC.

    Shafranik believes that Russian oil companies must focus their attention on the whole European space. There are tendencies for that, but what is being done is only one percent out of what's necessary. He noted that "the increase of the state's role in what is connected with our companies' support on world markets, as well as in enhancing export capabilities is noticeable." The main question for Russia and the Russian oil sector is where the earned money goes. As of today, by Shafranik's data, $8 billion is invested annually in new projects, whereas at least $35 billion is needed. Should this not be done, the fact that Russia has a lot of oil will not help it, he said. "We are not increasing but only restoring the production in comparison with what we had before, and should we fail to prepare new deposits beforehand (this takes at least 5-7 years) we will be left with nothing," Shafranik said.

    As for the price for oil, Shafranik said that it should be within the corridor of at least $25-28 per barrel.

    The spring turnabout in prices is connected first of all with Iraq, but the situation in that country is "a serious but not an only incentive for oil prices' growth," he said. One of the important factors that influence prices is the growth of energy consumption in Asia, in particular in India and China.

    Nevertheless, by Shafranik's forecasts, if there follow no aggravations like the one in Iraq the price may fall. In case the political situation in Iraq does not improve, and other political cataclysms occur, the prices may be even above $40-50 per barrel. But the worst thing for the world and Russian economy is if the prices suddenly fall, for instance, down to $20 per barrel.

    That's why, Shafranik believes, it would be better if they vary within the $25-28 corridor, though both the Russian and world economies may "swallow" the maximum price of $30 per barrel. For Russia, the optimal price now is $28 per barrel, as the Russian economy has got used to it during the year.

    As Shafranik is the president of the Committee on international, business, scientific and cultural cooperation with Iraq, special attention at the press conference was paid to issues of Russian business' return to that country.

    Shafranik said that Russian oil companies that have contracts in Iraq do not intend to give them up and are ready to start work as soon as "basic stability" is established there, that is, it is clear with whom and how talks can be held and who answers for what.

    Shafranik believes that "only a strong centralized authority can preserve Iraq as a single whole," but this can be reached only in a few years.

    At the same time, Shafranik believes that the future work in Iraq must be based on multilateral projects. For Western companies it's advantageous to involve Russian companies that already have an experience of work in Iraq and specific projects to work in that country. The SoyuzNefteGaz company headed by Shafranik prepared and submitted to Iraq's Oil Ministry the feasibility study for the project of developing the Rafidein deposit and is ready to cooperate with foreign companies in the issue of its realization.

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