Russia completes 64-km ESPO spur to China

Eric Watkins
OGJ Oil Diplomacy Editor

LOS ANGELES, Oct. 27 -- Russia’s state-owned pipeline monopoly OAO Transneft has completed construction of a spur from the Eastern Siberia-Pacific Ocean (ESPO) pipeline to the border with China, according Transneft Pres. Nikolai Tokarev.

“Construction on the China spur is completed,” Tokarev said, adding, “We really speeded things up and managed to complete it before the frost. We are now bringing the project up to the required parameters.”

Tokarev said the Chinese side continues to work on the pipeline’s crossing of the Amur River, where “they are experiencing certain technical difficulties.” He said, “We are uniting our efforts. We hope to complete that item by the end of the year.”

The pipeline spur stretches 64 km in Russia, from Skovorodino to the Amur River, which marks the border with China. The line will be able to ship 15 million tonnes/year of oil, rising to a total of 300 million tpy over the 20-year contract between the two countries.

From the Amur River, the Chinese will transport the oil to Daqing through a 1,000-km pipeline, and have constructed 390 km of that line so far. “We believe it is realistic to finish up in 2010, as we agreed in the contract,” Tokarev said.

Earlier, the first railway train with Eastern Siberian oil arrived at the port of Kozmino near Nakhodka on ther Pacific seaboard, the planned terminus of the ESPO line. Arriving on Oct. 22, the train was comprised of 72 tank-cars carrying 60 tonnes each for use in filling the port's pipeline system.

Chinese state media reported the arrival of the oil as “Russia's bid to diversify its energy markets by expanding into the Asia-Pacific” and quoted a Transneft official as saying Russia “expected to ship oil to Asia-Pacific clients by yearend.”

Russian authorities say that oil will be branded Vsto, an acronym based on the Russian name for the East Siberian-Pacific Ocean line: Vostochnaya Sibir-Tikhii Okean.

“The Energy Ministry is completing the formalities for an East Siberian oil brand, and it will be called Vsto,” said Igor Rustamov, general director of VerkhnechonskNefteGaz, which holds the license for the Verkhnechon field.

“This is low-sulfur oil—that is its advantage. In terms of quality, Vsto is better than Urals and slightly worse than Brent," Rustamov said, echoing earlier statements by Russian officials.

Earlier this month, officials at Russia’s energy ministry said the new ESPO crude will be light and medium-sour, superior to Urals export blend but inferior to Siberian Light (OGJ Online, Oct. 12, 2009).

Contact Watkins at hippalus@yahoo.com.

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