Russia takes direct approach to U.S. market

HOUSTON -- The first direct shipment of 2 million barrels of Russian oil to the United States arrived at the Port of Houston last week in what will be the first of about five or six such shipments to Texas and possibly Louisiana this year.

The shipment is not that much crude in the larger scheme, but it's a symbol of the agreement to forge closer ties between Russian and U.S. energy industries signed by Presidents George W. Bush and Vladimir Putin earlier this year.

The Russian oil company supplying the oil, Yukos, is also using this year's shipments to see if it can profitably export crude. The bottlenecks were obvious from the start but Yukos wanted to take a direct approach.

"There are two ways Russian oil could get to the United States: It could be pushed out of Europe in a very indirect way or we could ship it directly. We decided to ship it directly," said Bruce Misamore, a Houstonian who is the chief financial officer for Yukos, Russia's second-largest oil company.

The oil took a circuitous route from Russia to Houston. The tanker Astro Lupus was filled from three smaller vessels, which had shipped the oil from the Black Sea ports of Novorossiisk, Theodossia and Kavkaz and through the Aegean Sea.

The additional shipments also will be coming to Houston but may go to the Louisiana Offshore Oil Port, a deep-water oil receiving facility 18 miles off the coast of Louisiana, where a supertanker can directly deliver crude which then flows through a pipeline to shore.

Misamore acknowledged the logistical challenges need to be resolved. At the top of that list is construction of a deep-water port and more pipelines, before Russian oil can begin flowing into the United States in significant volumes.

"We believe that these pilot shipments will put us on the path to creating an efficient system of providing a stable source of non- OPEC crude oil for the U.S.," he said. "As we expand our production, the United States can become a new market for Yukos and Russia."

This shipment comes as Russian oil companies are trying to establish a worldwide presence as they ramp up their oil production. Yukos' production grew by 17 percent last year, and is expected to jump another 20 percent this year.

Misamore's high-profile position at the Russian oil company is an example of Yukos' and other Russian oil companies' shift away from their old images of insulated fiefdoms tied to the old Soviet political structure.

Yukos has been in the vanguard of this movement to reshape Russian oil companies. Their goal is to ultimately be compared with Western competitors such as Royal Dutch/Shell Group and Exxon Mobil.

Russian oil has made it to U.S. refineries in the past but through swaps of oil in the Middle East. This shipment is the first direct load of oil from Russia to the United States.

Mike Smith, assistant secretary of the Department of Energy's office of fossil energy, described this as "historic."

"The events taking place today are prime examples of how two nations can work within the ever-changing global marketplace in order to strengthen the economies of both countries," Smith said. "I hope this will be the first of many shipments of Russian oil coming to the United States."

Since the energy cooperation agreement was signed by Bush and Putin, there has been much debate about whether Russian oil could be economically delivered to the United States to supplant some of the oil the United States imports from more volatile parts of the world such as the Middle East.

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