Espo-2 Will Cost 330 Bln Rubles – Transneft

KHABAROVSK. March 5 (Interfax) – Investment in construction of the second line of the Eastern Siberia-Pacific Ocean pipeline will total 320 billion-330 billion rubles, said Sergei Sergeyev, the general director of ESPO Project Management Center LLC, a Transneft company.

“It is a very capital-intensive project, in which 320 billion- 330 billion rubles will be invested in 2006 prices,” Sergeyev said at a presentation of ESPO-2. “We plan to prepare the feasibility study and conduct all necessary expert evaluations this year. In the second quarter 2009 we hope to complete the working documentation, conduct the commercial tenders and probably in the second half 2009 we can begin construction,” he said.

Sergeyev said it was too early to specify a date when the pipeline would be filled with oil or how much oil would be delivered.

ESPO-2 pipeline, which will include 31 pump stations, will be brought on-stream in two stages, according to the declaration of intent for the construction presented on Wednesday.

In the first stage a total of 30 million tonnes of oil a year will be pumped, increasing to 50 million tonnes in the second stage. The pipeline will stretch 1,963 kilometers from Skovorodino to the oil terminal at Kozmino.

Talks with China on construction of a branch line there are underway, he said. “Currently no specific documents on construction of a branch pipeline have been established,” he said.

If construction of the branch is agreed, it will run from the pump station at Skovorodino in Amur region, he said.

ESPO-2 will run 822 kilometers through Amur region, 324 kilometers through the Jewish autonomous region, 247 km through Khabarovsk territory and 570 through Primorye.

In Khabarovsk territory the pipeline will cross the Ussuri Island, a portion of which is to be transferred to China under a treaty with that nation. Sergeyev stressed that the pipeline will remain at least five kilometers inside Russian territory along its entire route.

The pipeline does not represent an environmental hazard to bodies of water or the ecosystem of the Far East, he said.

The pipeline will pass 15 kilometers south of Khabarovsk. The project includes a provision for providing branch lines to the oil refineries in Khabarovsk and Komsomolsk-on-Amur, he added.

ESPO is being built to transport oil from fields in Siberia to Asian-Pacific markets. In the first phase, the 2,400-kilometer Taishet-Skovorodino stretch will be built and an oil terminal with capacity to handle 30 million tonnes a year will be built on the Pacific coast. Oil will be further transported from Skovorodino to the Pacific coast by rail.

The second phase will see construction of a pipeline linking Skovorodino and Kozmino and upgrades to the terminal’s capacity. The first phase of ESPO was originally scheduled to begin operations in October-December 2008. However, Transneft President Nikolai Tokarev has said the pipeline will not be ready before the fourth quarter 2009.

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