Pipeliners

13 March 2007 - Upstream OnLine - Russia's crude oil pipeline monopoly Transneft wants to change its tariff regime, company boss Semyon Vainshtok said today, adding the shake-up would subsidise a pipeline route to China favoured by state-run oil producer Rosneft. In an interview published this morning in Moscow-based newspaper Kommersant, Vainshtok said he wanted a single network-wide tariff regime to replace the range of fees payable for pumping oil through Russia's many pipelines now. "It will mimic the tariff system used by the railways: the further you send the cargo, the cheaper its transit will be," he said. The scheme would be based around the main oil area of Western Siberia and would aim to make exporting oil from Russia viable regardless of which outlet the cargo was sent to. "In the final analysis it will make no difference to an oil man whether he exports oil through Novorossiisk, Skovorodino or Kozmino," Vainshtok said, referring to Russia's main Black Sea hub, its China export route and a planned Pacific terminal. Vainshtok said the plan was still being worked on and Transneft had not yet formally submitted it. Transneft is building an $11 billion pipeline to Skovorodino, a town just north of the Chinese border, and may extend it all the way to the Pacific Ocean if enough oil is found in Eastern Siberia, a relatively unexplored region. Analysts at Alfa-Bank said Vainshtok's plan would subsidise the eastern route at the expense of other routes, effectively forcing Russian oil producers to fund exports to China along a route which would otherwise be prohibitively expensive. The route is championed by Rosneft, which has said it wants to be the main exporter through the new pipeline and plans to build a refinery at the terminus of the Pacific stretch. Alfa-Bank said the proposed tariff shake-up would be negative for the Russian oil sector as a whole. "We believe that, if adopted, the new principles for establishing tariffs for pipeline crude transportation outlined by Vainshtok could significantly change how oil companies deliver crude," the bank's oil analysts said in a research note.