Pipeliners

IRKUTSK, May 23 (RIA Novosti, Alexander Batalin) - A pipeline from East Siberia to the Pacific Ocean to supply countries in the Asia-Pacific region will be finished by December 2008, an official said Tuesday. Mikhail Chemakin, the head of Vostoknefteprovod, a company involved in construction of the East Siberia-Pacific Ocean (ESPO) pipeline, said the terms would not be changed despite the need to bypass Lake Baikal. President Vladimir Putin said in late April that the ESPO pipeline should pass outside the drainage basin north of Lake Baikal, the world's largest body of fresh water and an environmentally sensitive zone on Unesco's list of World Heritage Site, upsetting state-owned oil pipeline monopolist Transneft's previous plans. "The directive to finish construction was defined by a government resolution as December 2008, and it remains unchanged," Chemakin said at a Transneft meeting in Irkutsk. Designers chose the longest variant for the new ESPO route, with the pipe passing 200km from Baikal. The bypass route will be 1,920 km long and will pass through the Irkutsk Region, Yakutia and the Amur Region.

22/05/2006 RZD News – Over 150 kilometers of pipes have been supplied for the East Siberia – Pacific Oil Pipeline Project, a source at the project operator (a Transneft subsidiary) told.
The pipes have been made in Chelyabinsk, Vyksun and Ukraine. They are being unloaded at the Chuna, Vikhorevka and Korshunikha-Angarskaya stations of the Baikal-Amur railroad. The source said they are preparing for building the main 620-kilometer sector of the pipeline between Taishet and Ust-Kut. "Contracts are being signed with contractors and sub-contractors, personnel are being recruited and accommodated, construction materials and equipment are being supplied, permissions to use land lots and forest areas are being issued, and technological processes are being attested for local conditions,” he said.
The construction began in late April near the town of Taishet in the Irkutsk region, and will end near Nakhodka on the Primorye territory in late 2008. The pipeline will be over 4,000 kilometers long and have the annual capacity of 80 million tonnes. At first crude will be supplied form West Siberia, and East Siberian and Yakutian deposits will become the main source of Russian crude exports to the Asia-Pacific region in the future, reports ITAR-TASS.

05-22-2006 Regnum News - The ArmRosgazprom Company intends to complete construction of 22.5 km of the first 47 km long section of the Iran-Armenia pipeline, ArmRosgazprom Director General Karen Karapetyan announced at a meeting with the press on May 22. According to him, the agreement on construction of the 22.5 km long section worth $2.7 million was signed by the company and Arvandan Company (Iran). "After finalizing construction of the first section of the Iran-Armenia pipeline, it will be connected to ArmRosgazprom gas system," Karen Karapetyan noted adding that ArmRosgazprom will have to increase carrying capacity of its pipes, in particular, by extending the diameter. "We do not know yet, how it will be financed, probably, from the Armenian state budget, probably, by the Iranian side, or, maybe, with the help of new investors," Karen Karapetyan noted. As he said, all the countries in the region experience deficit in energy. "From this point of view, Armenia has an opportunity to become a liberal place, as there is untapped energy potential and a brilliant perspective to supply energy particularly to Iran, Iraq, Turkey, Georgia and Azerbaijan," Karen Karapetyan pointed out.

05-23-2006 Regnum News - "We spent more funds on the construction of the Baku-Tbilisi-Ceyhan main export oil pipeline, as we knew that in 2009 4 % of all world oil will be delivered to the world oil markets via Turkey – through the BTC and the Bosporus and Dardanelle," BP Vice President Ian Palliser told in an interview to Turkish press on May 22, Trend reports.
According to him, the company has been working with the Turkish government for a long time over the BTC project implementation, construction of the pipeline is close to completion and the first tanker will leave the Turkish port of Ceyhan this spring. "It will enable Turkey to become an 'energy bridge' between the oil and gas producers and the European and other markets," Palliser is quoted as saying, adding that the ceremony of BTC opening will be held in summer.
"We also deliver tankers via the straights, which increases the burden of the Bosporus and Dardanelle. As more oil is pumped via the BTC as less crude will run via the straights," Ian Palliser concluded.

05-17-2006 Regnum News - On May 16, Israeli MP Joseph Shagal reported to the press in Baku that while meeting Azerbaijani Minister of Industry and Energy Natig Aliyev the Israeli side proposed construction of a new pipeline from Israel’s Ashkelon city which will join the Baku-Tbilisi-Ceyhan (BTC) main pipeline, a REGNUM correspondent informs. “Baku oil can be transported to Ashkelon via this new pipeline and to India and Far East. It is profitable from financial point of view as well. Natig Aliyev said the project is interesting and he will have talks with the Israeli energy minister concerning this,” Shagal said. In particular, according to Shagal, Ceyhan and Mediterranean port of Ashkelon are situated only 400 km apart. Oil can be transported to the city in tankers or via specially constructed under-water pipeline. From Ashkelon the oil can be pumped through already existing pipeline to port of Eilat at the Red Sea; and from there it can be transported to India and other Asian countries in tankers. As Shagal informed, Natig Aliyev had invited Israeli Infrastructure Minister to visit traditional Caspian oil exhibition-conference to be held early in June in Baku. The member of Knesset expressed his assurance the invitation would be accepted and realization of the above-mentioned idea would be discussed in detail.

ST. PETERSBURG, May 18 (RIA Novosti) - Russian Energy Minister Viktor Khristenko said Thursday a merger was possible between state-owned oil-pipeline companies Transneft (RTS: TRNFP) and Transnefteproduct. "In this case any corporate restructuring is of course possible. But this does not mean the physical merger of transport systems," Khristenko told journalists in St. Petersburg. "No decision has been made so far," Khristenko said about the possibility of a merger between Transneft and Transnefteproduct.

17 May 2006 [14:18] - Today.Az - Kazakhstan has made up its mind about joining the Baku-Tbilisi-Ceyhan (BTC) main export pipeline to take Caspian oil to world markets. An agreement to that effect will be signed by the presidents of the two countries at a meeting on joint confidence building measures in Asia, AssA-Irada reports. The issue was discussed at a Kazakhstan cabinet meeting chaired by Prime Minister Danial Akhmetov. He said the transportation of oil must be carried out by local companies to ensure that state interests are observed. Akhmetov said consultations at expert level and discussions on taxation aspects were currently underway. "We have yet to reach agreement on these issues," he added.

11/05/2006 (13:18) RZD-News - The ceremony of Baku - Tbilisi - Ceyhan oil pipeline in Turkey setting in operation is scheduled for July 13. The Minister of Industry and Energy of Azerbaijan Natik Aliyev informed the journalists. The Minister informed that high-ranking officials of Azerbaijan, Georgia, Turkey, the USA, the Great Britain and other countries are expected to participate in the ceremony. The BTC pipeline length is 1767km, coming across Azerbaijan - 443 km, Georgia - 248km, Turkey -1076 km. The pipeline flow capacity is 50 mln. tons of oil per year. The pipeline capacity is 50 million tons of oil per annum. The participants of BTC project are the following: BP (30.1%); SOCAR (25%); Unocal (8.9 %); Statoil (8.71 %); TPAO (6.53%); Itochu (3.40%); Amerada Hess (2.36 %); ENI (5%); ConocoPhilli?s (2.5%); In?ex (2.5%), Total (5%). ENI, ConocoPhillips, Inpex, and Total participate in Kashagan field development. At present the process of pipeline filling is continuing. Sending of the first tanker with Azerbaijan oil from port Ceyhan is expected to take place in the end of May. The solemn ceremony will be held in July, reports Kazakhstan Today.

09 May 2006 [20:23] - Today.Az - Oil major BP will load the first cargo of Azeri crude from its $4 billion BTC pipeline in Turkey at the end of May, trade sources said on Tuesday. The giant 1,770 km pipeline will carry Caspian oil to the west, sidestepping Russia and loosening its stranglehold on exports from the region. The new flow is also expected to lower western dependency on Middle East oil, Reuters reports. Azeri crude will also help meet global refinery demand for sweeter, lighter feedstocks that are relatively easy to process to make gasoline and diesel. BP expects the pipeline's capacity to reach a million barrels per day (bpd) by 2008. The route bypasses the shipping bottlenecks from the Black Sea to the Mediterranean at the Turkish straits. During the winter, crude shipments through the straits can be held up for weeks. BP is set to load the first shipment of Azeri from Ceyhan on May 27-29. The cargo is a trial cargo and no more have yet been scheduled, traders said. "They will be testing the installations and equipment with this cargo," said one. "We will find out in the next few days if there are going to be exports from the pipeline in June." A BP spokesman said on Tuesday that the company had no fresh information to add to a previous statement when it said it expected the first cargo to load in early summer. The pipeline has almost been filled to its 10.4 million barrels capacity, traders said. The first cargo is likely to be a mix of some crude that has come through the pipeline and oil that had been shipped from the Black Sea port of Supsa to help speed the process of filling the storage at Ceyhan, traders said. There are seven storage tanks with capacity of a million barrels capacity each at Ceyhan. Azerbaijan has to date exported its crude through a 150,000 barrels per day pipeline to the Black Sea port of Supsa, in railcars to the Black Sea port of Batumi, or in pipelines through Russia. The differential for Azeri crude has slipped in the past two months, in part as the market prepares for increased export volumes, traders said. Azeri oil was pegged at around a dollar below the North Sea sweet crude benchmark BFO on Monday. On March 9, the grade traded at dated BFO plus $1.25. BP's partners in BTC are Azerbaijan's state oil firm SOCAR, Chevron Corp, Norway's Statoil , Italy's ENI , France's Total , Japan's Itochu and INPEX, ConocoPhillips and Amerada Hess.

04.05.2006 MosNews - Lithuanian President Valdas Adamkus has accused Russia of using its energy supplies to secure political influence over its neighbors and condemned Germany for backing Russia's controversial Baltic Sea Gas Pipeline, which will circumvent all of current transit countries, such as Poland, Ukraine and the Baltic states. Adamkus spoke to the British Financial Times newspaper on Wednesday, May 3, on the eve of an international pro-democracy conference in Vilnius. Regarding Germany's stance on the pipeline he said: "I believe I can understand the Russian position but I cannot understand Germany's position. As a member of the EU, they acted without even extending the courtesy of advising the Baltic states [about their plans]." Adamkus's comments echoed those of Polish officials including Radek Sikorski, the country's Defense Minister. Earlier this week Sikorski compared the Baltic pipeline deal with the Molotov-Ribbentrop pact — the secret German-Soviet agreement signed just before World War II. The agreement divided up Eastern Europe between Nazi Germany and the Soviet Union. Referring to Moscow's efforts to extend its influence through energy policy, Lithuanian President said: "I don't want to use the world blackmail." However he made it clear that he was very concerned about Russia's economic and political pressure.

05-05-2006 Kommersant - Kazakhstan studies chances to construct a Trans-Caspian gas pipeline via Turkey to E.U., Kazakh Energy Minister Bakhtykozha Izmukhambetov announced after the meeting with E.U. spokesmen. The European Union counts on getting 20 bcm of gas from Kazakhstan by 2015 and stands ready to fund the project. It looks like Kazakhstan and E.U. have agreed on joint efforts to open transit of hydrocarbon via Russia, which is still the key transit territory for Europe. Izmukhambetov made his statement concerning the possible construction of gas pipeline once he had talks with Energy Commissioner Andris Piebalgs, who arrived in Astana yesterday to canvass the future of energy deliveries from Kazakhstan and to promise investments. Kazakh energy minister said Kazakhstan will submit a proposal to the European Commission related to construction of Trans-Caspian Gas Pipeline, including the funding of project and its feasibility study. The matter at stake is extension of Baku-Tbilisi-Erzerum (BTE) gas pipeline by Tengiz-Turkmenbashy branch worth up to $5 billion. The project will allow to export gas of Kazakhstan and Turkmenistan via BTE. Kazakhstan's application will be duly considered, Piebalgs promised. Regardless, no one has explicitly said so far that the project would be fulfilled. In the European Commission, they call the project the fourth transport corridor for gas deliveries to be implemented even if the cooperation with traditional gas suppliers, including Russia, ultimately steps up. Russia will have the access to an oil pipeline constructed to China, Kazakhstan announced yesterday via Interfax. Russia is expected to annually ship 5 million tons of oil to China through Kazakhstan. In view of that statement, the intention of E.U. is probably to show to Russia that there could be an alternative supplier of oil and gas and to enforce on it the Energy Charter, which will prevent Russia from discriminating the third countries, including Kazakhstan, when it comes to oil/gas transit via its territory. The Trans-Caspian project calls for attracting Azerbaijan as a participant, which will hardly face difficulties. During his April visit to Washington, Azerbaijan's President Ilham Aliev backed up the idea of shipping gas to Europe bypassing Russia.

Tomsk, 27 April - ITAR-TASS - [State-owned] Vneshtorgbank is ready to take part in funding the construction of the Eastern Siberia-Pacific Ocean oil pipeline, the bank's head, Andrey Kostin, has said. "We are one of the few banks that can fund a billion-dollar project," he said. "If we receive a proposal, we will of course consider it. We are working with Transneft and are ready to play some role in funding this project," Kostin said. [State-owned] Sberbank head Andrey Kazmin has also said that his bank is ready to take part in funding the pipeline. "We would be delighted to take part in funding this project if Transneft makes an announcement. We have already received verbal proposals," he said. "We are waiting for formal proposals but everything depends on the borrower. We can't just throw money away," Kazmin said.

05-01-2006 RBC News - The construction of the first section of the East Siberia-Pacific Ocean pipeline began in Taishet (Irkutsk region) on Friday. General contractor for the project is the Stroisistema construction firm, based in Omsk, said Anatoly Bezverkhov, General Director of the East Siberia-Pacific Ocean Company (Transneft's subsidiary responsible for the pipeline project). 2.7 kilometers of pipelines have been laid so far. The pipeline will be built at a speed of between 200 and 300 meters a day, Bezverkhov said. "We will work fast in order to complete the construction by the second half of 2008 as planned," he stressed. The construction of the first section of the pipeline would be completed on time, despite the transfer of part of the pipeline to the north of Baikal Lake. Most probably, Transneft would abandon plans to take the pipeline to Buryatiya and Yakutiya, and it would go from Irkutsk to Yakutia, Bezverkhov said. On April 26 Russian President Putin asked Transneft President Semyon Vainshtok to lay the pipeline as far from Baikal Lake as possible. The project will be implemented in two stages. The first section of the pipeline, from Taishet to Skovorodino in the Amur region, with a capacity of 30 million tons, will be built by the second half of 2008, as well as an oil terminal on the Pacific coast. During the second stage, a pipeline will be built from Skovorodino to Perevoznaya Bay in the Primorsky region; it will have a capacity of 50 million tons a year. The total cost of the project is about $11.5 billion, of which $6.6 billion is the cost of the first stage.