Pipeliners

28.04.2005 12:25 MSK MosNews - Russian pipeline monopoly Transneft has been ordered to complete construction of the first stage of the Russia-Asia oil pipeline by mid-2008, the Russian Industry and Energy Ministry said on Wednesday, April 27. The first stage of the proposed 4,200 km (2,625 mile) pipeline, whose construction was approved by the government in December, will run from Irkutsk region in Siberia to the town of Skovorodino in the Amur region or mid-way to the Pacific. Oil will be taken from Skovorodino by rail to China and the Pacific coast, while the pipeline will be extended to both directions at later stages. "I order the approval of a Transneft proposal on the stages of construction of the Eastern Siberia-Pacific Ocean pipeline with a total capacity of up to 80 million tons per year (1.6 million barrels per day)," Russia's Industry and Energy Minister Viktor Khristenko said in the decree, quoted by Reuters. According to the decree, the first stage of the project will be financed by loans to Transneft, which has just raised a $250 million loan via British bank Barclays to expand its key Baltic export port of Primorsk. The costs of the project are much higher, however, and Russia has already suggested that financing, at least in terms of credits, should come from Japan which is very interested in Russian crude. Transneft has said the first shipments via the pipeline would rely on crude from West Siberia as the region is already connected to Irkutsk, but that it would need more crude from East Siberia to fill the pipeline to capacity. Interfax quoted the deputy head of the federal Subsoil Resource Agency Petr Sadovnik as saying on Wednesday the maximum potential of East Siberia was 50 to 60 million tons of oil per year and not enough to fill the Pacific pipeline. Sadovnik said the energy ministry had ordered an analysis of the resource base at fields in Western Siberia to boost supplies via the planned pipeline. Energy analysts say untapped fields in East Siberia may contain as much oil as West Siberia, where the Soviet Union and then Russia have produced the bulk of the crude since the 1970s. As MosNews reported, Russia has been considering the construction of an Asian pipeline for a long time. The China route, going to Dajing was supported by Yukos Oil Company which already exported a major part of its crude to China. The Japanese-backed route to the Pacific Ocean port of Nakhodka was supported by Transneft which owns the vast majority of pipelines on the territory of Russia. After more than a year of consideration the Russian government announced that it chose the Nakhodka route, but conceded that a branch to the Chinese border may be built from Skovorodino. The total cost of construction of the pipeline is now estimated at $11.5 billion.