New Transneft subsidiary to build ESPO-2

Russian pipeline monopoly OAO Transneft established a wholly owned subsidiary, the Far Eastern Construction Directorate, to build the second leg of the East Siberia-Pacific Ocean pipeline system (ESPO-2), extending 2,000 km from Skovorodino to Kozmino Bay.

Eric Watkins
OGJ Oil Diplomacy Editor

LOS ANGELES, Aug. 6 – Russian pipeline monopoly OAO Transneft established a wholly owned subsidiary, the Far Eastern Construction Directorate, to build the second leg of the East Siberia-Pacific Ocean pipeline system (ESPO-2), extending 2,000 km from Skovorodino to Kozmino Bay.

ESPO-1 is scheduled to begin operating late this year, while the launch of ESPO-2 is slated for 2014-2015.

Until ESPO-2 is completed, Transneft and rail car producer Uralvagonzavod plan to ship crude by rail from Skovorodino to Kozmino Bay under a joint venture company. Uralvagonzavod will contribute its railroad cars to the joint venture, while Transneft will contribute rail infrastructure.

Meanwhile, Transneft is expected to propose soon two new oil grades for export, one for oil to be pumped along the ESPO line and the other for oil to be exported through the Port of Primorsk. The ESPO line will carry oil from East Siberian fields to the Pacific coast for transport to Asian markets, while the Port of Primorsk is the terminus of the Baltic Pipeline System, which carries crude from West Siberian l fields.

According to Transneft, the sulfur content of oil exported through Primorsk should reach 1.1% by the beginning of 2010, 0.9% in 2015, and 0.7% in 2020. No similar percentages were given for oil to be transported through the ESPO line.

Transneft expressed concern about an increased volume of high-sulfur oil entering its pipeline system while the volume of low-sulfur oil is decreasing. The company said it accepted 67 million tonnes of high-sulfur oil into its system in 2008, a 29% increase over the 52 million tonnes it accepted in 2002.

Contact Eric Watkins at hippalus@yahoo.com .

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