Transneft says no more delays of pipeline

Executives of Russia's oil pipeline monopoly OAO Transneft pledged not to postpone the launch of the East Siberia-Pacific Ocean (ESPO) pipeline again.

Jul 31st, 2008

Eric Watkins
Senior Correspondent

LOS ANGELES, July 31 -- Executives of Russia's oil pipeline monopoly OAO Transneft pledged not to postpone the launch of the East Siberia-Pacific Ocean (ESPO) pipeline again.

Their announcement coincides with separate agreements by China and Japan that may help speed development of the pipeline, which has been years in the planning and negotiating stages.

Transneft President Nikolai Tokarev said in February the launch of the pipeline's first section would be delayed until late 2009 from late 2008.

The first 2,757 km section of the pipeline will run from Taishet in the Irkutsk region to Skovorodino in the Amur region. The pipeline's second section, still in the planning stages, will run from Skovorodino to Russia's Pacific coast.

Until the second section is completed, crude from East Siberia will be delivered by rail from Skovorodino to the port of Kozmino, now under development on Russia's Pacific Coast (OGJ, Mar. 10, 2008, p. 33).

The Transneft pledge coincided with reports that Russia's Minister of Natural Resources and Ecology Yury Trutnev signed an order of actualization of the long-term Russian mineral resources appraisal and rehabilitation program.

Industry sources said implementation of the program will speed up mineral exploration and promote filling the ESPO pipeline in proper time.

Decisions to hasten construction follow reports that China and Japan reached agreements with Russia over construction of the ESPO and development of mineral resources that could make the line commercially feasible.

On July 25, Russia and China said all technical and financial problems were settled for construction of an extension of the ESPO—along with the Altai gas pipeline—to China.

Since then, Japan announced plans to help Russia modernize the Trans-Siberian Railway by providing loans from the Japan Bank for International Cooperation as well as trade insurance underwritten by Nippon Export and Investment Insurance.

The agreement is part of a plan envisioned by the Japanese and Russian governments that also includes cooperation in development of natural resources and industry in regions along the transcontinental route.

Trade between the two countries has been growing sharply, rising 55% in 2007, largely due to Japanese imports of crude and nonferrous metals.

Contact Eric Watkins at hippalus@yahoo.com.

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