Russia, China sign protocol for ESPO's China spur

Russia's Transneft and China's CNPC signed a protocol in June for constructing a proposed 43-mile, 300,000 b/d spur of the East Siberia-Pacific Ocean oil pipeline from Skovorodino in Russia's Far East, to Daqing, China.

Eric Watkins
Senior Correspondent

LOS ANGELES, July 19 -- Russia's OAO Transneft and China's state-owned China National Petroleum Corp. signed a protocol in June for constructing a proposed 43-mile, 300,000 b/d spur of the East Siberia-Pacific Ocean (ESPO) oil pipeline from Skovorodino in Russia's Far East, to Daqing, China.

Andrey Dementyev, deputy head of Russia's Industry and Energy Ministry, said China will fund construction of the $400 million spur and will also provide 2,000 workers for the project.

Transneft has drawn up a feasibility report on investment for the construction, Russian authorities have approved it, and the document has been submitted to the Chinese.

Construction of the ESPO pipeline, designed to carry 80 million tonnes/year of East Siberian crude 4,700 km to Russia's Pacific Coast, was launched in April 2006. The line will supply Siberian oil to the Asia-Pacific market.

Construction of the pipeline is being carried out in two stages. The first leg, a 2,757-km, 30 million-tonne pipeline, will link Taishet in East Siberia's Irkutsk region to Skovorodino in the Amur region of Russia's Far East on the border with China. The second leg will reach a further 2,100 km from Skovorodino on to Russia's Pacific Coast.

On July 12, Transneft Pres. Semyon Vainshtok said the pipeline monopoly had already built some 1,000 km of the ESPO line, or more than a third of the project's first stage, adding that the company had reached the planned level of building 5 km/day.

The Russians have long said that construction of the second stage of the line, from Skovorodino to the Pacific Coast— for which the Japanese have been lobbying hard—would depend on the further development of oil fields in East Siberia, thought necessary to supply the complete line and to ensure its profitability.

In early March, Vladimir Bogdanov, president of Surgutneftegaz, told Russian prime minister Mikhail Fradkov that his company did not have enough oil even for the first leg of the pipeline, casting doubt on the project's feasibility.

But Vainshtok last week denied that, saying there would be enough oil, with OAO Rosneft supplying 25 million tonnes of crude and Surgutneftegaz, the remaining 7 million.

Earlier, a similar assurance was offered by Russian Industry and Energy Minister Viktor Khristenko, who said there will be enough oil for the first phase of the ESPO pipeline (OGJ Online, July 10, 2007).

Contact Eric Watkins at hippalus@yahoo.com.

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