Pipeliners

VLADIVOSTOK, Russia, March 31 (AFP) - An international consortium developing oil fields off Russia's far-eastern island of Sakhalin has displaced its pipelines to protect endangered grey whales, company CEO Ian Craig said early Thursday. The pipelines are to link two offshore oil rigs belonging to the Sakhalin 2 project developed by Sakhalin Energy Investment Company Ltd (SEIC) to the Russian mainland and were displaced 20 kilometers (12 miles) southward to preserve the whales' feeding grounds. "We chose an option which abides by the principle of maximum precaution," Craig said. The decision to displace the pipeline was taken after a group of independent experts pointed out the disturbing effects the pipelines could have on the whales. "The independent experts' conclusions helped us find a balance between (the needs to) provide the region with energy, to contribute to Russia's economic development and to protect these wonderful animals," Craig said. However, SEIC did not follow another recommendation made by the experts, who wanted another pipeline to be displaced by seven kilometers (four miles) away from the whales' feeding grounds. SEIC is an international oil consortium grouping the Royal Dutch Shell oil company and Japanese companies Mitsui and Mitsubishi.

31.03.2005 11:10 [Neftegaz.ru] - Sakhalin Energy has to follow the example of Royal Dutch/Shell and reroute offshore pipelines in its oil and gas development projects in the Russian Far East to help protect an endangered western gray whale. The pipelines which connect two production platforms in the Piltun-Astokhskoye field off Sakhalin Island to the shore will be moved 20 km south of the original location, away from the key feeding area of the critically endangered whales, Reuters reported. The company has confirmed that, following a review of its original site selection, the location of the second platform in the Piltun-Astokhskoye field will not be changed.

30.03.2005 14:33 MSK MosNews - Sakhalin Energy will reroute offshore pipelines in its oil and gas development projects in the Russian Far East to help protect an endangered western gray whale, Royal Dutch/Shell said on Wednesday. The pipelines linking two production platforms in the Piltun-Astokhskoye field off Sakhalin Island to the shore will be moved 20 km (12 miles) south of the original location, away from the key feeding area of the critically endangered whales, Reuters reported. Sakhalin Energy has confirmed that, following a review of its original site selection, the location of the second platform in the Piltun-Astokhskoye field will not be changed.

MOSCOW, March 29 (RIA Novosti) - Investment decision on the North European gas pipeline will be taken in September, Gazprom CEO Alexei Miller told journalists on Tuesday. "The investment decision on the North European gas pipeline will be taken in September and its construction will move to the investment phase," Miller said. The decision on the beginning of the construction was made at the Gazprom board meeting on November 18, 2002. The examination of the pipeline's 917-kilometer overland leg in Russia is under way. In the Vologda region, sites for compressor stations have been finalized and a preliminary version of the transport network for building the project has been prepared. Development of the line portion of the pipeline and the attendant communications has been completed. In the maritime Leningrad region, the project's engineering scheme has been prepared, initial data on the pipeline's line portion and compressor station sites gathered, engineering survey of facilities along the pipeline begun. The project of the North European gas pipeline provides a basically new route for the export of Russian gas to Europe. It features the lack of transit states en route, which cuts country-related risks and the cost of Russian gas transportation, simultaneously raising the reliability of export supplies. The pipeline route passes via the Baltic from Vyborg to the German coast near Greifswald. The gas pipeline project provides for the construction of maritime branching to consumers in Finland, Sweden, Britain and other countries.

03.25.2005 Prime-TASS - As Russia's pipeline monopoly Transneft nears the completion of its feasibility study of an oil pipeline from the Russian city of Taishet to an outlet on the Pacific coast, state company Russian Railways has stepped up its fight to maintain control over oil shipments to China. On Monday, Russian Transport Minister Igor Levitin announced that an oil pipeline to the area would be viable only if the total oil and oil product exports to Asian countries exceeded 30 million tonnes, and until then companies should use Russian Railways. "We haven't done intensive studies on the numbers needed, but it would not surprise me if they need this kind of volume for the pipeline to be realistic," Zarko Stefanovski, oil and gas analyst at Aton Capital, said. Levitin claimed that a pipeline from eastern Siberia to the Pacific coast would be unlikely for at least another dozen years, and with current oil exports to China standing closer to 10 million tonnes annually, the figure of 30 million tonnes per year certainly seems ages away. One of the major causes of such high volume requirements for a Siberia-Pacific pipeline to be commercially viable is the state-regulated pipeline tariff system. The current tariff system employed by Transneft would be insufficient to offset the potential pipeline's multi-billion-dollar price tag, analysts said. At present, preliminary estimates of the cost of the pipeline range as high as U.S. $15 billion, part of which could come from Japan in exchange for access to the exports. "We have to wait for Transneft to finish the feasibility study to say for sure, but with the current level of transportation tariffs, the pipeline is not feasible," Steven O'Sullivan, co-head of research at United Financial Group, said, adding that Transneft is actively pushing for the government to change its oil shipment tariff regulations. On March 15, Transneft announced that it was prepared to propose for approval by the government several tax optimization schemes that would make the construction of the pipeline more feasible. Deputy Economic Development and Trade Minister Andrei Sharonov has said he is opposed to granting Transneft tax and customs concessions for the pipeline, and has stated that the state pipeline monopoly should not receive any funding from the federal budget for the project. Another obstacle for the pipeline is the question of how the pipeline will be filled. At the outset, much of the pipeline's capacity would likely be from oil diverted from the well-developed western Siberian fields. In the long run, however, Europe is a much more economically practical destination for oil exports from West Siberia, and the pipeline's supplies would mainly have to come from the essentially unexplored oilfields of East Siberia, analysts said. Estimates of the potential resources and production capacity of eastern Siberian oil fields vary radically. In late January, Sergei Fyodorov a departmental director at Russia's Natural Resource Ministry, said that further exploration could uncover another 1.5 billion tonnes of oil resources, and that the eventual oil output of the area could amount to 50 million tonnes annually. "Eastern Siberia is still an under-explored region, so we don't really know how much there is out there. Obviously, (the creation and expanded use of a pipeline) is contingent upon having enough reserves to fill it," O'Sullivan said. The exploration that has been done has not led to any massive projects, as most of the oil that is currently developed in the area is used only for local consumption, Stefanovsky said. While natural gas monopoly Gazprom (GAZP) and Russian-British oil major TNK-BP have both expressed some interest in developing East Siberia's natural gas reserves, no companies have yet stepped out of the woodwork to develop the area's oil, he said. One change that may help the exploration of the area is Russian Natural Resources Minister Yury Trutnev's recent suggestion that the government create development license guarantees for companies that discover deposits through exploration. Without this proven potential and some sort of existing development, the construction of a pipeline is less attractive for Transneft, analysts said. The Catch-22 of the situation, however, is that without a viable, efficient means of transporting oil from these fields, there is little incentive for companies to begin the arduous process of developing them. "This is slightly a chicken or the egg situation. It doesn't make as much sense to develop the fields without a pipeline there, but without development there is not much use of a pipeline," O'Sullivan said. Despite Levitin's claims to the contrary and Russian Railways' aggressive, U.S. $1.4 billion investment program to improve its transport infrastructure in order to increase oil exports to China, railway transportation is simply not on a par with pipelines and does not pack the punch to spur development of the region, analysts said. "You can't transport oil all the way to southern China by rail. It's just not feasible," Adam Landes, oil and gas analyst at Renaissance Capital, said. "Given a choice, a pipeline will always be used, the world over. The chance of accidents is significantly lower with a pipeline and the overall transport is far more efficient. If you take figures from the U.S., transport through pipelines accounts for 67% of all oil product transportation and about 17% of the total freight volume, yet only accounts for 2% of the total shipping costs," Landes said. Even though Russian Railways expects oil exports to China via its railways to top 10 million tonnes in 2005 and reach roughly 15 million tonnes in 2006, without an oil pipeline to the area, Russia's oil ties with its resource-hungry Asian neighbors will not grow as quickly as they should, analysts said. Both Japan and South Korea have offered to invest billions of dollars for the pipeline project, and recently there have been reports that North Korea is interested in connecting its railway lines with Russia's railways in order to increase Russian oil imports. It is expected that the oil from the pipeline will be exported to China, Japan, South Korea, Indonesia and Australia. At present, the Pacific port town of Nakhodka and neighboring Perevoznaya Bay are the frontrunners for the final destination of the pipeline, though Russia's Transport Ministry has denied that any final decision has been made. The pipeline is also expected to travel through the town of Skovorodino near the Chinese border, where oil could be unloaded and shipped via railways to China. An endpoint in Russia rather than in China would allow the Russian government to maintain greater control over who eventually receives the oil, a response to paranoia about China's growing strength. But even the feasibility study of the pipeline has taken a few detours, as one government deadline of March 15 has already passed, analysts said. Prime Minister Mikhail Fradkov has said that he expects the results to come by May 1, analysts said, while Transneft itself predicts they could come in July. "The Russian government should be working harder to expand (its oil ties with Southeast Asia). I can understand strategic reasons for not building a pipeline to one country (China), but it should be pushing harder, especially since Russia wants to move into the markets like China and India," Stefanovski said. "Europe is already well-supplied with Russian-type crude and the demand for its oil must be found somewhere else..

25.03.2005 17:22 MSK MosNews - On Friday, March 25, Ukraine's Anti-Monopoly Committee gave a green light to the plan to build a new transit gas pipeline that would boost exports of Russian natural gas to Europe. Russia's gas monopoly Gazprom and Ukraine's state-owned oil and gas company Naftogaz Ukraine agreed on plans to build a new pipeline in 2004. The new 200km (120 mile) pipeline will be built from Bohoradchany in Western Ukraine to Uzhgorod in the Carpathian mountains, located on the border with the European Union. The construction cost is estimated to equal $50 million. The pipeline is a part of a bigger plan to set up an international consortium that will manage a huge and somewhat outdated network of Ukraine's gas pipelines.

MOSCOW (Igor Tomberg, candidate of economics, leading researcher at the Center of Foreign Economic Studies, Institute of International Economic and Political Studies of the Russian Academy of Sciences) - On Monday, Gennady Fadeyev, head of Russian Railways (RZD), announced RZD plans to deliver Russian oil to Rajing, North Korea, which has a refinery. This again created an atmosphere of uncertainty over the final route of the Eastern Pipeline. Fadeyev's desire as a businessman to develop the profitable oil delivery business is understandable.
RZD has been negotiating the reconstruction of the eastern sector of the Trans-Korean Railroad and its linkup to the Trans-Siberian Railroad. The problem was outlined in August 2002, when Vladimir Putin and North Korean leader Kim Jong-il discussed the idea of linking up the South and North Korean railroads to create an uninterrupted railroad from the Far Eastern ports to western Europe.
The efforts of the RZD management in this area are understandable and justified. But the concept of oil delivery to Rajing by rail contradicts the concept of an oil pipeline to the Pacific coast in the pipe-tanker project. Oil companies are increasing production and have to use alternative delivery routes - by water and rail. LUKoil vice president Leonid Fedun said his company's spending on transportation topped $2 billion a year, exceeding production costs. In all, the country is losing $6-8 billion a year (direct budgetary losses are $3-4 billion) from the shortage of oil delivery routes, Fedun said.
Everything seems to point to the need to rapidly develop new oil export routes. Prime Minister Mikhail Fradkov signed the relevant instructions and the Chinese premier expressed readiness to use the new pipeline. But the project hit a hitch, and a constant problem at that: the environment.
According to Transneft plans, the pipeline should run from Taishet in the Irkutsk region to Skovorodino in the Amur region to Perevoznaya bay on the Pacific coast. Transneft president Semyon Vainshtok said the first stage provides for the construction of the pipe from Taishet to Skovorodino and or the oil terminal in Perevoznaya. Oil will be delivered from Skovorodino to Perevoznaya by rail. Vainshtok said the project would cost $11.5 billion.
What seems strange is the choice of Perevoznaya instead of the previously planned port of Nakhodka. In my opinion, this choice is the reason for a new brake on the project. Local environmentalists and officials have risen to protect the bay and Yuri Osipov, the president of the Russian Academy of Sciences, appealed to Dmitry Medvedev, the chief of the presidential staff.
On March 21, the press carried a statement from the Federal Service of Ecological, Technological and Nuclear Supervision (Rostekhnadzor), which instructed Transneft to justify the choice of Perevoznaya bay as the site for the oil terminal. "We share the concern of public and environmental organizations over the East Siberia-Pacific pipeline and believe that at the subsequent design stages Transneft should justify its choice of Perevoznaya Bay for building a port," said Andrei Malyshev, acting head of the service.
The situation with the choice of the bay looks like a spot of trickery, if not a detective story. An environmental organization, BROK, says that, despite repeated promises by members of the territorial administration to review the route in favor of Nakhodka, the final documents presented to the public name Perevoznaya as the only site for the oil terminal.
This freezing shallow bay on the Gulf of Amur is apparently too small and extremely dangerous to the giant 200,000-300,000-ton tankers, which will have to call at the port around the year. The crucial 10th volume of the project, which includes other routes and an alternative site for the terminal, with substantiated choices, cannot be found in Vladivostok. According to Transneft spokesmen, the volume had not been presented to the public because it contains confidential and strategic information. But environmentalists say that preventing a catastrophic oil spill and the death of valuable ecological systems and recreation resources of the South Maritime regions, which is stipulated in the project, means the documents should be completely open. In particular the reasons for making the choice should be made clear.
Transneft is trying to prove that the company has all the requisite technologies to ensure the environmental safety of the oil terminal. But it does not say how much this will cost. According to the company, the pipeline will cost $11.5 billion. Does it have this kind of money? It cannot expect to get private investment without offering access to the pipeline, and Japan's investment is under a question mark. Transneft's returns, though considerable ($1 billion in 2003 and possibly more in 2004), will not be enough to pay for the construction. So far, it can expect tax breaks and is lobbying for them.
Oil for the pipeline is always a problem in such projects, but it has been pushed into the background. While the project is being coordinated, we should assess the how much money is reliably available for the pipeline's construction. Is there enough money, or will spending have to be radically cut during construction? In such cases, environmental provisions are the first to suffer.
The RZD management is playing on the favorable transport situation in the region, though these efforts make one wonder how long railroads will remain the only way to deliver Russian oil to Asia Pacific countries. Rail transit is acceptable as a forced but temporary measure. But proceeding from limits on the volume of deliveries and transport fees, pipelines appear to be a much cheaper method. In other words, the diversification of markets for Russian oil will remain an impossible dream without the Eastern Pipeline.

Tuesday, March 22, 2005 Bloomberg - Russia should delay construction of a $15.5 billion oil pipeline to the Pacific coast and instead use existing railways until more crude is pumped in eastern Siberia, Transportation Minister Igor Levitin said Monday. Hauling oil to the Pacific coast by pipeline will become commercially viable only after Russia starts sending more than 55 million tons of oil per year (1.1 million barrels per day) in that direction, Levitin said, according to a transcript of a speech he gave in Moscow. "Shipping this amount of oil will only become possible in 12 or 15 years," Levitin said. "We need to use railways for a longer period, taking into consideration the gradual nature of oil exploration in eastern Siberia." Russia pumps most of its oil in western Siberia and mainly exports to Europe. The Pacific pipeline is a cornerstone of its plan to diversify exports of crude, starting deliveries of the fuel to Asia and the United States. Russia currently sends by rail to China about 137,000 bpd of crude extracted in western Siberia. Russian Railways, or RZD, plans to invest $1.4 billion to upgrade links to China, allowing the country to more than triple crude oil exports to China. The government should nominate "key suppliers of crude oil [to China], who would commit to guaranteed oil cargoes by 2010 on the ship-or-pay basis," Khasyan Zyabirov, RZD first deputy chief executive, said Monday in a statement. To send 55 million tons of crude per year to the Pacific coast, Russia would need to pump in eastern Siberia at least 30 million tons per year (600,000 bpd), Levitin said. The 4,200-kilometer oil pipeline to the coast will need between $11.5 billion and $15.5 billion in investment, according to oil pipeline monopoly Transneft. Rail shipments of oil would enable Russia to use its Trans-Siberian and Baikal-Amur railways at 100 percent capacity, compared with 60 percent now, Levitin said. The Soviet Union built the Baikal-Amur railway, or BAM, in 1980s, in an effort to move the railway farther from the Chinese border. The railway, which cost the Soviet Union more than $20 billion, now has a loss of $94 million per year, Levitin said. In 2003, Russia said Japan had offered as much as $7 billion in loans and investments if the country chose the pipeline to the Pacific instead of a $2.8 billion route to China backed by Yukos. Resource-starved Japan now relies on the Middle East for about 90 percent of its oil imports and hopes to secure alternative crude oil supplies. "The creation of the eastern Siberian oil pipeline system, with the direction from Taishet to the port of Nakhodka with a possible branch to China, remains a priority project," Deputy Economic Development and Trade Minister Andrei Sharonov said in a statement. Russia used railways to export 40 million tons of crude oil and 66 million tons of oil products last year, Levitin said. About 87 percent of the cargoes were shipped to the country's western border and ports, while the rest was transported either to China or Far East ports, according to RZD.

RBC, 21.03.2005, Moscow 14:48:30.Consolidated net income of Russian-based Transneft has grown 20 percent to RUR41.1bn (around USD1.467bn), Transneft President Semyon Vainshtok has announced at an energy forum in Moscow. Transneft exported 238m tons of oil, including oil transit. Russia's overall oil production was 450m tons in 2004. The company wants to boost oil export facilities by 16 percent this year. Transneft is targeting oil exports of 255m tons this year, Vainshtok stressed. He named the Baltic Pipeline System among the company's high-priority projects. Transneft wants to boost its capacity to 60m tons in the first half of this 2006.

MOSCOW, March 17 (RIA Novosti) - Presidential aide Igor Shuvalov said there would be no problem with the operation of the pipe to Nakhodka. "We will build the pipe to Nakhodka in the Far East. A closed market is more dangerous to us, though it may get more investment," he said. "We will develop this route with a branch to China," the aide told journalists. There will be no problem with filling the pipe. "We expect the oilfields of east Siberia to develop," Shuvalov said. "This will be crucial to us. At first, oil will be supplied from existing fields, and we have four major deposits there. The government is to determine the sequence of selling oil from them." Igor Shuvalov noted the importance of Russia's energy dialogue with India and China. "We should prove to the civilized world that that we are the best energy partner. We are a reliable partner for the Western community and the Eastern neighbors," he said. "So, we badly need an active dialogue with India and China now."

MOSCOW, March 17 (RIA Novosti) - The Kremlin says the state will keep the pipelines but independent producers will be granted access to them. "The key issue for us is to keep the oil and gas pipes in state ownership," presidential aide Igor Shuvalov told journalists on Wednesday. But "we will pledge to create a regime according to which access to the pipe will be completely transparent" for independent producers, he added. This calls for adopting requisite bills within a year. "The rules of exporting gas and providing it to the pipe should be completely transparent," the presidential aide said. "Gazprom must have the monopoly right to export but [the other] companies should have a transparent mechanism for getting access to the pipe." He assured journalists that the state did not plan to oust private companies from the oil sphere. "The oil industry should be competitive and there must be tough competition on the domestic market," Shuvalov said. He said about the appearance of an oil-producing asset in Gazprom: "To us, this is only an instrument for influencing the energy markets on the global scale and not an attempt to cut short competition on the domestic market." "We are not creating a major company that would produce and transport oil and gas in order to stifle competition among national producers. This is not our goal. We will see that Gazprom shall not replace oil companies," Igor Shuvalov said.

RBC, 16.03.2005, Moscow 15:14:31.Transneft is planning to work on the construction of the Baltic Pipeline System more intensely to make the third stage of the project operational in the first quarter of 2006. This will enable Transneft to boost the system's capacity by 10m tons to 60m tons per year. As Transneft President Semyon Vainshtok said, Transneft's board of directors had decided to make the third stage of the system operational in the first half of 2006. As the company's press department announced, the decision to boost the system's capacity by 10m tons, and not 12m tons as was planned earlier, is due to the need to cut the project's cost. The company is saving almost USD1bn by employing this measure, Vainshtok added.

MOSCOW, (Igor Tomberg, senior researcher, Foreign Economic Studies Center, Institute of International Economic and Political Studies, Russian Academy of Sciences, for RIA Novosti) - The Eastern Pipeline's route is still shrouded in mystery. Although Prime Minister Mikhail Fradkov signed the relevant resolution at the end of last year, neither the resolution, nor a detailed feasibility study has been published. "The Russian government and President Vladimir Putin have made it clear that once the Siberian oil pipeline has been completed, priority will be given to China," Chinese Prime Minister Wen Ziabao said on March 14. No official denials have followed, which means that Japan's key role in the pipeline project has been put in question. Many column inches have been dedicated to how important the pipeline is for Daqing, the center of China's oil industry, while Beijing has had to continually deny accusations that it is provoking higher oil prices. Even Foreign Minister Li Zhaoxing had to speak on the issue a day or two ago. He dismissed claims that the global oil prices were growing because Chinese industry was consuming more energy. The minister admitted that the Chinese energy hydrocarbon imports had increased, but said they only accounted for 6% of the oil sold on the global oil market. However, he chose not to mention that the increase in China's crude imports was 35% in 2004. The Japanese efforts to lobby for an oil pipeline all the way to the Pacific can hardly be stopped. The need for Siberian oil and the striving to outstrip China in demand have even resulted in Japan's territorial claims becoming less vociferous. The New York Times referred to Tokyo's Mayor Shintaro Ishihara, Japan's best-known nationalist, as saying that Japan, the United States and Russia should pool their efforts on the oil pipeline project, as this will make a great contribution to containing China, which has no resources of its own. However, the recent chill in the Russian-Japanese relations and refusal of the Japanese prime minister to attend the celebrations of the 60th anniversary of VE Day in Moscow have caused friction between the two countries, which has allowed China to make a move. In any case, the Chinese premier's recent statement could hardly have been made on the spur of the moment. It seems that Russia has an advantage in this game, but it has to be used skillfully. Obviously, Russia has to walk a tightrope, trying to balance between its assertive partners in Beijing and Tokyo, as well as South Korea, which has recently indicated its willingness to join the construction of the Eastern Pipeline. According to Transneft's president, Semyon Vainshtok, the pipeline project looks to be fairly flexible. It should be implemented stage by stage. The first leg will run to Skovorodino with possible oil deliveries to China. The second leg will include a railroad to the sea terminal to be built by then. The third leg to the city of Nakhodka will be built while the East Siberian oilfields are commissioned. According to Mr. Vainshtok, the Eastern Siberia-Pacific project does not boil down to the pipeline only. It has a whole number of aspects to develop the productive power and social infrastructure of Siberia and the Russian Far East, enabling the declining population to remain in the region and bolstering Russia's influence in the Eastern Hemisphere.

MOSCOW, March 14 (RIA Novosti) - Stockholders of the Caspian Pipeline Consortium plan to finish drafting the memorandum on mutual understanding in early April, Kazakhstan's Minister of Energy and Natural Resources Vladimir Shkolnik told journalists on Monday. "It means that only technical issues will remain," Mr. Shkolnik said. The Caspian Pipeline Consortium was established in 1992 by the governments of Kazakhstan, Russia and Oman to construct and use the 1,580-km export oil pipeline from the Tengiz oil field in Kazakhstan to the port of Novorossiisk (Russia's Black Sea coast). The maximum annual capacity of the pipeline is 67 million tons of oil. Russia accounts for 24% of the consortium's stock, Kazakhstan for 19% and Oman - 7%. The remaining 50% belong to US companies Chevron (15%), Mobil Oil (7.5%) and Oryx (1,75%), the Russian-US joint venture LUKArco (12.5%), the Russian-British joint venture Rosneft-Shell Caspian Ventures (7.5%), UK's British Gas (2%), Italian Agip (2%) and Kazakhstan Pipeline (1.75%).

MOSCOW, March 3 (RIA Novosti) - Russian Economic Development and Trade Minister German Gref criticizes the North European Pipeline project. Speaking at the session of the government, the minister pointed out a low efficiency of the investments in the construction of this gas pipeline. He also reminded the audience that the development of the North European Gas Pipeline would cost $5.6 billion. "These investments will make it possible to achieve the pumping of 20 billion cubic meters a year," the minister said. In connection with this, Mr. Gref named four strategic obstacles that hamper the development of the gas industry and Gazprom. "The first obstacle is the absence of the determination of strategic investment priorities. The second one is the problem of the existing priorities in the construction of new export-oriented pipeline," Mr. Gref said. The third obstacle, according to the minister, is the non-efficient management of Gazprom. "The production of gas and the development of the deposit are growing slowly, while the market situation is favorable, the export gas tariffs have grown by 31% and the inner tariffs are annually increasing at the minimum by 5% above the inflation level," the minister said. The absence of the medium-term and long-term planning was named by Mr. Gref as the fourth obstacle for the development of the industry. On January 16, 2004, the government of the Russian Federation took a decision to adopt a proposal of the Russian Ministry of Energy and the Gazprom public company, which was coordinated with the interested federal executive bodies, about designing the North European Gas Pipeline. This project opens a new in principle direction for exporting Russian gas to Europe. The pipeline will cross the Baltic Sea from Vyborg to the shore of Germany in the region of the city of Greifswald. The gas pipeline project provides for the construction of sea branch gas pipelines to Finland, Sweden, Great Britain and other countries. In different variants the productivity of the gas pipelines varies between 19 and 30 billion cubic meters a year. It has been planned to begin gas supplies through this pipeline in 2007 and to reach the design output in 2009.

MOSCOW, March 2 (RIA Novosti) - The profitability of the Caspian Pipeline Consortium (CPC) is the main premise for the project to expand, Russian Industry and Energy Minister Viktor Khristenko opined during the talks with CPC stockholders in Astana the day before, according to a press release by the Russian Industry and Energy Ministry. "The consortium's profitability, timely payment of dividends to its shareholders and taxes to the CPC member-states' budgets are the key prerequisites for expanding CPC. This is the joint position of Russia and Kazakhstan," Mr. Khristenko said. Commenting on the outcome of the negotiations, he noted that "the shareholders agreed on the basic principles of the CPC expansion, pricing issues and expenditure control." The ministry mentioned that CPC was the first major pipeline in the former Soviet Union, whose construction involved probate investments. The pipeline connects the Tengiz oilfield in western Kazakhstan and the export terminal on the Black Sea coast near Novorossiisk. Launched in October 2001, CPC has exported over 50 million metric tons of crude, including 22.5 million metric tons in 2004. According to Mr. Khristenko's opposite number, Kazakh Energy and Mineral Resources Minister Vladimir Shkolnik, CPC shareholders agreed on boosting the pipeline's throughput capacity from 28 million metric tons of oil to 67 million metric tons and increasing the oil transportation price from $27 per ton to $29.5 per ton. According to Mr. Shkolnik, the conference in Astana allowed its participants to come up with a joint approach to pricing, reach agreement on the fundamentals of the expansion and work out a joint approach to "control over expenditure - both operating and capital expenditure caused by the CPC expansion. "We disagreed on how to achieve this," Mr. Shkolnik noted, adding that the shareholders were to convene in Moscow in early April to finalize the memorandum on the principles of the CPC expansion. "Launching the CPC expansion is very important to us," Mr. Shkolnik emphasized.

01.03.2005 MosNews - Russia's Leningrad region in the country's north-west has approved plans to build three new oil terminals on the Gulf of Finland, it was reported late on Monday, Feb. 28. The construction of the terminals could boost Russia's export capacity to northwest Europe by 600,000 barrels per day by 2008.
Leningrad region surrounds the city of St. Petersburg and borders the Baltic Sea's Gulf of Finland. Regional authorities said on Monday that they approved construction applications from German-owned oil terminal operator Oiltanking and Russia's Severo-Zapadny Alliance. Russia's third-largest oil company, TNK-BP, was also granted permission to continue a feasibility study for its planned terminal, Reuters reported.
The Russian section of the Gulf of Finland has at least a dozen new oil export projects, and if they all come to fruition, total annual oil shipments on the Baltic could push beyond 170 million tons of oil a year or 3.4 million barrels per day. Russia has been pushing hard for new terminals in the north to avoid traditional routes through the Black Sea that pass via the congested Turkish straits. But experts fear the Baltic route could gradually become as crowded as the Bosporus due to the limited capacity of the Danish straits.
TNK-BP has said it plans to build a $175 million terminal in Ust-Luga on the gulf's southern coast to export up to 7.5 million tons a year of crude oil (150,000 barrels per dar), 4 million tons of fuel oil and 500,000 tons of gas oil per year.
The head of Oiltanking's Russian office, Boris Martynov, told a news conference on Monday his firm would spend $135 million to build a terminal. That will export a total of 7.5 million tons of oil and products (150,000 barrels per day), mainly crude oil and fuel oil, but also small volumes of gas oil and gasoline. "We are going to work with all Russian oil companies," said Martynov, declining to specify the planned key clients.
Leningrad region's deputy governor Grigory Dvas told the same news conference that Severo-Zapadny Alliance, which also obtained a building permit on Monday, wanted to build a $340-million terminal. That outlet would have a designed capacity to export around 200,000 barrels per day of crude oil —- of which 40 percent would be crude oil, 40 percent fuel oil and 20 percent gas oil.
Russia's most active Baltic Sea oil export hub is Primorsk, where capacity has more than tripled in less than two years to its current 1.1 million barrels per day. Other active routes include terminals at Vysotsk and Kaliningrad which belong to Lukoil Oil Company as well as the port of St. Petersburg itself.