03-17807. Secretarial Oil and Gas Business Development Mission to Russia

AGENCY:

Department of Commerce.

ACTION:

Notice to announce Secretary Evans—Oil and Gas Business Development Mission to Russia, September 21-25, 2003.

SUMMARY:

Secretary of Commerce Donald L. Evans will lead a senior-level business development mission to St. Petersburg and Moscow, Russia from September 21-25, 2003. The focus of the mission will be to assist U.S. businesses to explore trade and investment opportunities in the oil and gas sector including exploration and production, equipment and services, and transportation. The delegation will include approximately 15 U.S. based senior executives of small, medium and large sized U.S. firms. The mission will reaffirm U.S. Government support of U.S.-Russian cooperation in the energy sector and seek to expand opportunities for U.S. companies. Members will participate in the U.S.-Russia Commercial Energy Summit in St. Petersburg on September 22-23, and will participate in additional meetings in Moscow on September 24-25.

DATES:

Applications should be submitted to the Office of Business Liaison by August 8, 2003. Applications received after that date will be considered only if space and scheduling constraints permit.

FOR FURTHER INFORMATION CONTACT:

Office of Business Liaison; Room 5062; Department of Commerce; Washington, DC 20230; Tel: [phone]; Fax: [phone].

SUPPLEMENTARY INFORMATION:

Secretarial Oil and Gas Business Development Mission to Russia

September 21-25, 2003

I. Description of the Mission

Secretary of Commerce Donald L. Evans will lead a senior-level business development mission to St. Petersburg and Moscow, Russia from September 21-25, 2003. The focus of the mission will be to assist U.S. businesses to explore trade and investment opportunities in the oil and gas sector including exploration and production, equipment and services, and transportation. The delegation will include approximately 15 U.S. based senior executives of small, medium and large sized U.S. firms. The mission will reaffirm U.S. Government support of U.S.-Russian cooperation in the energy sector and seek to expand opportunities for U.S. companies. Members will participate in the U.S.-Russia Commercial Energy Summit in St. Petersburg on September 22-23, and will participate in additional meetings in Moscow on September 24-25.

II. Commercial Setting for the Mission

The U.S. has become increasingly engaged with Russia on energy issues. At the Presidential Summit in May 2002, Presidents Bush and Putin announced a new Energy Dialogue, with the goals of increasing global energy supply and security, and promoting U.S.-Russian cooperation in developing energy resources. The first event of the new Dialogue was the U.S.-Russia Commercial Energy Summit, in October 2002 in Houston, Texas. This historic Summit brought together top officials and executives from the U.S. and Russian governments and energy industries. It was chaired by the U.S. Secretaries of Commerce and Energy, and the Russian Ministers of Energy and Economic Development and Trade. Together, they agreed to strengthen energy cooperation between the U.S. and Russia by working towards the common goals of diversifying energy supplies, improving the investment environment, expanding commercial partnerships, and developing resources in an environmentally responsible way. They also agreed to form the U.S.-Russia Commercial Energy Dialogue (CED). The CED consists of U.S. and Russian energy companies, and provides a forum for discussing issues affecting the U.S.-Russia commercial energy relationship. The CED has had regular meetings since the Commercial Energy Summit, and will submit a report outlining ways to promote more U.S.-Russian energy cooperation at the Second Commercial Energy Summit, scheduled for September 22-23 in St. Petersburg, Russia.

Oil and Gas Equipment and Services

Russia is currently the fifth largest export market for U.S.-made oil and gas field equipment. In 2002, U.S. exports of oil and gas field machinery to Russia totaled $328 million, an increase of 16 percent from 2001. High oil prices, which allowed Russian oil companies to invest in new and existing oil fields, new pipeline construction, and major loans to Russian oil companies from the U.S. Export-Import Bank and the European Bank for Reconstruction and Development account for much of this increase.

Because Russia's mature oil production base has been exploited for decades, efforts to offset production declines and to increase oil recovery factors have led to excellent prospects for U.S. exports, especially those targeted at oilfield rehabilitation and enhanced oil recovery technology. There are also a number of new projects planned for previously undeveloped regions such as Timan Pechora, East Siberia, and the Russian Far East. The huge oil fields offshore Sakhalin Island in the Russian Far East, which are being developed by several international consortia, present enormous opportunities for U.S. equipment suppliers. The consortia are expected to invest a total of $30-45 billion over the 30-year life cycles of these projects. Investment in energy-related infrastructure such as pipelines, ports, and processing facilities is also planned.

Oil and Gas Exploration and Production

In 2003, Russia remains the world's top energy producer, when production of both oil and natural gas is considered on an oil equivalent basis. This year, Russia could produce as much as 8.0 million barrels of oil and natural gas liquids per day (bpd) and 610 billion cubic meters (bcm) of natural gas. These figures represent a dramatic recovery in the oil and gas sector since 1996 when oil production had dropped to only 6.04 million bpd and in 1997, when gas production was 575 bcm. The Russian government expects oil and gas production to continue to increase over the next decade as oil companies discover new fields and rehabilitate old ones.

To date, U.S. companies have played a fairly limited role in developing Russia's massive oil and gas resources. U.S. companies' involvement ranges from several small joint ventures to the massive Sakhalin-I project in the Russian Far East.

Oil and Gas Transportation

Russia's oil exports have been steadily increasing since 1995. In 2003, Russia will export about 5.5 million bpd of crude oil and refined oil products, based on industry projections. The Russian government and Russian energy industry have stated that they intend to increase oil and gas exports, and to find new markets in addition to Europe, where the demand for oil and gas is expected to remain relatively flat. This will require new export infrastructure including pipelines and oil and gas terminals. Currently, consideration is being given to building an oil terminal at the warm-water port of Murmansk; a 2450-kilometer pipeline from Angarsk (East Siberia) to Daqing in northeastern China; and an LNG plant on Sakhalin for gas exports to the Far East.

III. Goals for the Mission

The mission aims to further U.S. commercial policy objectives and to advance specific U.S. business interests. The mission will:

• Assess the commercial climate and export and investment opportunities in Russia;
• Advance specific U.S. business interests of the mission members by introducing them to key host government decision-making officials and to potential clients and business partners;
• Assist new-to-market firms to gain a foothold in Russia and increase the visibility of U.S. companies already operating in Russia in this very competitive market;
• Support U.S. Government efforts to eliminate market access problems encountered by U.S. firms in Russia;
• Encourage continued progress in economic reforms in Russia;
• Promote U.S.-Russian energy cooperation.

IV. Scenario for the Mission

The Business Development Mission will provide participants with exposure to high level contacts and access to the Russian market. American Embassy officials and local U.S. businesses will provide a detailed briefing on the economic, commercial and political climate, and current export and investment opportunities. Meetings will be arranged with appropriate government ministers and other senior level government officials. In addition, private meetings will be scheduled with potential business partners. Networking events will also be organized to provide opportunities to meet Russian business and government representatives. Secretary Evans will meet with his trade counterparts and other senior government officials to encourage support for U.S. companies in Russia's energy sector.

Mission members will participate in the U.S.-Russia Commercial Energy Summit in St. Petersburg, which will allow them to meet senior energy sector officials and industry leaders. They will also travel to Moscow for additional meetings with senior Russian government officials, as well as for one-on-one sales and business partnership opportunities.

The tentative trip itinerary will be as follows:

September 21: Arrive in St. Petersburg

September 22: Commercial Energy Summit in St. Petersburg

September 23: Commercial Energy Summit in St. Petersburg; travel to Moscow

September 24: Meetings in Moscow

September 25: Meetings in Moscow; depart Moscow

V. Criteria for Participant Selection

The recruitment and selection of private sector participants for this mission will be conducted according to the “Statement of Policy Governing Department of Commerce-Overseas Trade Missions” established in March 1997. Approximately 15 companies will be selected for the mission. Companies will be selected according to the criteria set out below.

Eligibility

Participating companies must be incorporated in the United States. A company is eligible to participate if the products and/or services that it will promote (a) are manufactured or produced in the United States; or (b) if manufactured or produced outside the United States, are marketed under the name of a U.S. firm and have U.S. content representing at least 51 percent of the value of the finished good or service.

Selection Criteria

Companies will be selected for participation in the mission on the basis of:

• Consistency of company's goals with the scope and desired outcome of the mission;
• Relevance of a company's business and product line to the identified growth sectors;
• Rank of the designated company representative;
• Past, present, or prospective relevant international business activity;
• Diversity of company size, type, location, demographics, and traditional under-representation in business.
• Timely receipt of signed mission application, participation agreement, and participation fee.

Recruitment will begin immediately and will be conducted in an open and public manner, including publication in the Federal Register, posting on the Commerce Department trade missions calendar—http://www.ita.doc.gov/​doctm/​tmcal.html—and other Internet websites, press releases to the general and trade media. Promotion of the mission will also take place through the involvement of U.S. Export Assistance Centers and relevant trade associations.

An applicant's partisan, political activities (including political contributions) are entirely irrelevant to the selection process.

VI. Time Frame for Applications

Applications for the Russia Business Development mission will be made available on or about July 3, 2003. The fee to participate in this mission has not yet been determined, but will be approximately $8,000-$10,000. The fees will not cover travel or lodging expenses, which will be the responsibility of each participant. For additional information on the trade mission or to obtain an application, contact the Office of Business Liaison at 202-482-1360. Applications should be submitted to the Office of Business Liaison by August 8, 2003, in order to ensure sufficient time to obtain in-country appointments for applicants selected to participate in the mission. Applications received after that date will be considered only if space and scheduling constraints permit. A mission website will be posted at http://www.commerce.com/​russiamission2003 to share information as it becomes available.

Contact: Office of Business Liaison, Room 5062, Department of Commerce, Washington, DC 20230, Tel: [phone], Fax: [phone],&fnl; http://www.commerce.com/​russiamission.

Dated: July 9, 2003.

Dan McCardell,

Director, Office of Business Liaison.