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Russia to finish 1st. stage of Asia oil pipeline

Posted on: April 15, 2009


Reuters – Tuesday, April 14

By Vladimir Soldatkin

MOSCOW, April 13 – Russia will next week complete construction of the first stage of a pipeline that will carry oil to Asia and the Pacific, including the 15 million tonnes a year to be supplied to China in exchange for a $25 billion loan.

Oil pipeline monopoly Transneft <TRNF_p.RTS> has laid 2,672 km of the route, leaving only 21 km of the first stage remaining, company spokesman Igor Dyomin said on Monday.

“Next week we plan to complete work on laying the pipeline route,” Dyomin said by telephone.

Russia, the world’s second-largest oil exporter, is building the pipeline to move oil from huge new fields in eastern Siberia to energy-hungry Asian markets, a move that will also diversify Moscow’s energy reach beyond its traditional markets in Europe.

Transneft plans to launch supplies via the pipeline, the first such route linking Russia with Asian markets, in December after repeated delays. Pumping stations have still to be built along the route, as well as a port in far eastern Russia. The first stage of the East Siberian-Pacific Ocean pipeline will have capacity to move 30 million tonnes a year from the Siberian town of Taishet to Skovorodino, from where a spur will run to the Chinese border. Half of these volumes, or 15 million tonnes a year (300,000 barrels a day), will be covered by the agreement through which Transneft and Russian state oil champion Rosneft <ROSN.MM> will supply China in return for a $25 billion loan. [ID:nLH444229]

Rosneft and Transneft, which will receive $15 billion and $10 billion respectively, said on Monday they had signed a bilateral agreement on April 10 covering supplies to China. They gave no details of the volumes.

Transneft Vice-President Mikhail Barkov said last week his company would supply 6 million tonnes of oil annually via the pipeline to China. Rosneft, from which it will buy the oil, would supply the other 9 million tonnes directly, he said.

Shipments are scheduled to begin from 2011, he said.

Transneft has previously estimated the budget for the first stage of the project — which includes construction of the port at Kozmino on the Pacific coast, but not the pipeline which will run to it — at 390 billion roubles .

The second stage, which will extend from Skovorodino to the Pacific, is expected to raise the pipeline’s annual capacity to 80 million tonnes.

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