The Moscow Times
May. 17, 2002. Page 5

Oil Firms Help Close Cuban Spy Base

              By Dmitry Zhdannikov
              Russia has given two state oil firms extra export allocations totaling 5.1 million barrels
              to help fund the closure of a secret base in Cuba used to spy on the United States
              during the Cold War, traders said Thursday.
              They said Prime Minister Mikhail Kasayanov signed a secret order granting Rosneft
              and Zarubezhneft the extra shipments for May and June.
              The companies will pay the government the difference between a costlier export market
              and cheaper domestic prices.
              Traders said Rosneft and Zarubezhneft will ship 500,000 tons and 200,000 tons of crude
              respectively to the Lithuanian port of Butinge and the Polish port of Gdansk.
              One trader said oil would be lifted from Butinge and Gdansk by a major European trader
              and sold in Europe. At current prices, net revenues from the extra exports would raise
              some $120 million.
              "Kasyanov put a 'secret' stamp on this resolution. I think it is mainly because of the
              agreement with OPEC not to boost shipments until July," one trader said.
              Many observers say Russia has in fact boosted exports of crude oil and oil products,
              and will let the agreement drop after June.
              Last October, President Vladimir Putin won plaudits in Washington but infuriated Cuba
              by announcing that Moscow was pulling out of the Lourdes radar station.
              Officials say the listening post has cost Moscow up to $200 million per year and has
              been financed for decades by crude-swap schemes.
              Russia exported crude to Venezuelan refineries in Germany, while Venezuela supplied
              energy-hungry Cuba. However, in 2000 the government halted Cuban oil programs
              saying they lacked financial transparency.
              Traders said the Energy Ministry was considering extending the new arrangement to
              the third quarter of 2002, when Russia is likely to formally abandon its oil curb deal
              with OPEC and will need more money to shut down the base.
              The government promised oil-producing cartel OPEC to cut exports by 150,000 barrels
              per day for the first half of the year to help prop up world oil prices.