Putin launches first phase of ESPO oil line

Eric Watkins
OGJ Oil Diplomacy Editor

LOS ANGELES, Dec. 29 -- Russian Prime Minister Vladimir Putin, eyeing the emergence of new markets in Asia-Pacific, launched the first phase of the East Siberia-Pacific Ocean (ESPO) oil pipeline.

“It is a strategic project, which enables us to enter the growing markets of the Asia-Pacific region,” Putin said in a ceremony at the port of Kozmino on Russia’s Pacific Coast.

At the ceremony, Putin initiated the loading of the first tanker, The Moscow University, which was set to deliver the ESPO-brand crude to Hong Kong, according to Nikolai Tokarev, president of Russia’s pipeline monopoly OAO Transneft.

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

Transneft last month completed the first 2,757-km stretch of the pipeline which runs from Taishet in the Irkutsk region to Skovorodino near the Chinese border.

At Skovorodino, oil is currently being loaded on to railcars for transport to Kozmino, which lies 2,100 km further east. The rail connection will be phased out in 2012 when Transneft completes the second section of the pipeline from Skovorodino to Kozmino.

The first phase of the line is capable of carrying up to 30 million tonnes/year of oil, about half of it earmarked for China via a 67-km pipeline spur from Skovorodino to the Chinese border, and the other half destined for export from Kozmino. The full ESPO line will eventually carry up to 80 million tpy of oil.

The first phase of the ESPO project cost $12.1 billion, while another $2 billion was spent on construction of the Kozmino terminal.

Transneft will spend another $10 billion to build the pipeline extension to Kozmino, which analysts said will become Russia's third largest seaborne oil outlet after Primorsk on the Baltic Sea and Novorossiisk on the Black Sea.

Contact Eric Watkins at hippalus@yahoo.com.

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