Putin: Russia to complete ESPO's first phase 'within weeks'

Russia's Prime Minister Vladimir Putin said state-owned pipeline operator Transneft will complete construction of the first phase of the East Siberia-Pacific Ocean oil pipeline "within weeks."

Eric Watkins
OGJ Oil Diplomacy Editor

LOS ANGELES, Apr. 8 -- Russia's Prime Minister Vladimir Putin said state-owned pipeline operator OAO Transneft will complete construction of the first phase of the East Siberia-Pacific Ocean (ESPO) oil pipeline "within weeks."

"In just a few weeks, the phase during which the pipeline will reach the Chinese border will be over and we will go further to the Pacific Ocean," Putin told Russia's parliament.

The news will be welcomed in China, which has recently completed negotiations with Russia for a 67-km pipeline spur to run from the line's Phase 1 endpoint at Skovorodino to the Chinese border (OGJ Online, Mar. 9, 2009). From the border, the Chinese also plan to construct a 960-km pipeline link to Daqing.

Putin's remarks echoed statements last week that construction of an oil railway terminal in Skovorodino, which marks the endpoint of the first phase of the ESPO line, will be completed by this August.

Officials said the first test trains will begin running in October to Primorye from the Skovorodino station, which initially is designed to pump 15 million tonnes/year of oil, eventually increasing to 30 million tonnes.

The officials said that 11 sets of railway tracks will be laid at the station for pumping oil into tank cars, maneuvering in dispatching loaded trains, and other technical purposes.

Under construction also are an automated oil delivery and receiving point along with related transport facilities. As many as 10 trains/day will depart from Skovorodino to deliver oil to the export terminal at Kozmino on Russia's Pacific Coast.
Meanwhile, OAO Rosneft last week said it will finish building a pipeline from its giant, newly developed Vankor field in the Krasnoyarsk territory to the Transneft pipeline network by mid-April.

"We'll complete the last weld by Apr. 15," said Rosneft Chief Executive Sergei Bogdanchikov. "We've literally 6 km left," he told Russia's Vesti TV. "This will be a key event because it means the project is going well," he said.

Vankor field, which will be the main source of oil for the ESPO line, has estimated reserves of 200.4 million tonnes and probable reserves of 233.7 million tonnes.

"This is the biggest field in Russian history, and its launch will be a massive event," said Bogdanchikov, who noted that production from the field will begin in the third quarter.

He also said Rosneft and Transneft will sign an oil-trading contract by Apr. 10, under which Rosneft plans to sell the crude to Transneft, which will then repay China's loan.

In February, Russia and China initialed an agreement on building the ESPO pipeline spur, with China granting loans of $10 billion and $15 billion to Transneft and Rosneft respectively for 15 million tonnes/year of oil for 20 years (OGJ Online, Feb. 17, 2009).

Half of the planned 30 million tonnes of oil shipped to Skovorodino will be diverted to China along the 67-km pipeline spur and the other half will be moved by rail on to Kozmino until Phase 2 of the line is completed.

ESPO's first phase—2,700 km from Taishet to Skovorodino—is scheduled to start operating late this year, while ESPO's second phase, extending another 2,000 km from Skovorodino to Kozmino, is due to be completed by 2015.

Contact Eric Watkins at hippalus@yahoo.com.

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