Thursday, April 30, 2009
Transneft sees steady Russian output
04-30-2009 - Upstream OnLine - Russian oil pipeline monopoly Transneft expects the country's crude production to remain stable this year, despite the economic slowdown, and will receive the first tranche of a $10 billion Chinese loan by the end of May, company president Nikolai Tokarev said today. Russia last year recorded its first annual output decline in a decade and Moscow must balance its need for oil revenues against the demand of the budget as the country heads into recession. "Volumes will stay at practically the same level," Tokarev told Reuters in comments cleared for publication. Transneft is well-placed to calculate Russian oil production due to the orders it receives from producers to fill its pipelines. Tokarev said output would increase by 2012, although perhaps at a slightly slower rate than envisaged last year. "According to the data, the orders we receive from oil producers, there should be growth of 62 million tonnes by 2012," he said, referring to data submitted last November. "Probably, growth will not be so dynamic, although there is no decline. My forecast is that the production plan will not change radically." Russia produces about 485 million tonnes of oil annually, or 9.7 million barrels per day. Production has stalled as deposits in western Siberia reach maturity, and companies are now moving into eastern Siberia and the Arctic to maintain growth. To deliver this new crude to Asian markets, Transneft is building the East Siberia-Pacific Ocean pipeline. The first stage of the project will be complete by 25 December, Tokarev said. He said the second stage of the pipeline, which will extend to Russia's Pacific coast by 2014, would prove cheaper to build than the 400 billion roubles ($12 billion) originally budgeted. "We are sure we will succeed in lowering (the cost), as construction costs and pipes are cheaper. There is an opportunity to economise," Tokarev said. China will receive 15 million tonnes of oil annually over two decades as part of the $25 billion loan deal agreed with Transneft and state-controlled oil company Rosneft . Transneft will receive $10 billion and supply 6 million of tonnes of oil annually to China. Rosneft, from which it will buy the oil, will supply the other 9 million tonnes and receive $15 billion from China. Transneft also plans "in the near future" to issue bonds worth 35 billion roubles ($1.05 billion) to finance an export pipeline to the Baltic Sea, Tokarev said. "We have already registered the issue," he said, adding that it was part of a long-term plan to issue bonds worth a total of 135 billion roubles.
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