Russia's ESPO pipeline construction 'on schedule'

Russian Prime Minister Vladimir Putin, who recently launched a major new oil field, has been told that state-owned pipeline monopoly OAO Transneft is on schedule with construction of both phases of the 4,130-km East Siberia-Pacific Ocean (ESPO) pipeline.

Eric Watkins
OGJ Oil Diplomacy Editor

LOS ANGELES, Aug. 27 -- Russian Prime Minister Vladimir Putin, who recently launched a major new oil field, has been told that state-owned pipeline monopoly OAO Transneft is on schedule with construction of both phases of the 4,130-km East Siberia-Pacific Ocean (ESPO) pipeline.

“I am positive that the first line of the pipeline will be ready by the end of this year, and the construction of the second line will start immediately,” Transneft Pres. Nikolai Tokarev told Putin in a meeting on Aug 25.

The first phase of the ESPO line will extend from Taishet to Skovorodino, while the second will extend on from Skovorodino to Perevoznaya on Russia’s Pacific Coast. Phase 1 will carry 30 million tonnes/year of oil, while the line’s capacity will reach 80 million tpy with the completion of Phase 2.

The fully extended pipeline will pass through Taishet, Kazachinskoe, Skovorodino, and Perevoznaya as it crosses seven constituents of the Russian Federation, including the Irkutsk, Chita, and Amur regions, the Republic of Buryatia, the Jewish autonomous district, and the Khabarovsk and Primorye territories.

In addition to his report on the main line, Tokarev also said construction of a pipeline spur, from Skovorodino to the Chinese border city of Mohe, will be completed by mid-September and will go into operation by October 2010. From Mohe, China will build a separate line southward to the industrial city of Daqing.

Vankor field
Tokarev’s statements came just days after Putin launched operations at the Vankor field, which will supply Russia’s state-owned OAO Rosneft with 510,000 b/d of oil when it reaches peak production in 2014—about 25% of the firm’s output in 2008 (OGJ Online, Aug. 24, 2009).

"A new oil and gas province will be established here in the near future," Putin said at the launch, adding that Vankor field would feed oil into pipelines under construction to China and the Baltic Sea.

Earlier this year, China agreed to lend $15 billion to Rosneft and $10 billion to Transneft in exchange for 300 million tonnes of Russian oil over 2 decades, much of which will originate from Vankor.

The oil from Vanko will be delivered via a 556-km pipeline to Transneft's nationwide system, with deliveries to China scheduled to begin from 2011 via the ESPO line and its spur from Skovorodino to Mohe.

Vankor, which lies in the north of the Siberian region of Krasnoyarsk, holds 520 million tonnes, or 3.8 billion bbl, of oil reserves and 95 billion cu m of natural gas, according to Rosneft. This year, the field will produce 3 million tonnes, or 22 million bbl.

However, according to analyst IHS Global Insight, the development of Vankor will have the added value of stimulating further development in the region.

“The expectation is that a development of the magnitude of Vankor will provide additional stimuli for the development of the infrastructure of the Arctic and Far Eastern regions of Russia, which consequently will encourage oil companies to increase their exploration activities in these regions,” IHS Global Insight said.

Meanwhile, according to Transneft, the ESPO project is being developed in accordance with the Russian energy strategy up to 2020 and is based on an analysis of long-term forecasts of oil production in Russia as well as demand in Asia-Pacific markets, comprised largely of China, Japan, South Korea, India, Indonesia, and Australia.

In 2002, according to Transneft, the Asia-Pacific region consumed 992 million tonnes of oil and products, representing 28% of world demand. But Transneft forecasts that the region’s consumption will grow to 1.51 billion tonnes by 2010; 1.97 billion by 2020, and 2.205 billion by 2030.

In addition to the Vankor field, Russia’s Tomsk region and the Khanty-Mansi autonomous district in West Siberia as well as oil provinces of Eastern Siberia are expected to form the resource base for the new line.

Contact Eric Watkins at hippalus@yahoo.com.

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