October 2, 2008

Talakan Oil Enters Espo Pipeline

ST. PETERSBURG. Oct 2 (Interfax) - The first flows of oil from the Talakan field, owned by Surgutneftegas (RTS: SNGS), have reached the East Siberia-Pacific Ocean (ESPO) oil pipeline, Russian Energy Minister Sergei Shmatko told the Petersburg Dialog forum on Thursday.

"A new oil-bearing province has started operating in Russia. Oil has been arriving from East Siberia's Talakan field for two days now," he said.

Surgutneftegas did not comment to Interfax on the energy minister's statement, noting it was waiting for the official launch of the ESPO's first phase in a reverse mode on October 4. The company said in late July that the Talakan field was entirely ready for commercial oil extraction and pumping to the Transneft (RTS: TRNF) pipeline system.

The Energy Ministry told Interfax that the pipeline is currently working in the test regime to determine how it will function in the reverse mode. It will be launched in the very near future.

Transneft on September 22 filled the last stretch of the ESPO pipeline between Kirensk and Talakan with technical oil, earlier reports said.

East Siberian oil will run via the ESPO to the Angarsk petrochemical plant. Oil from the Verkhnechonsk (TNK (RTS: TNKO) - BP) and Talakan field will be the first to fill the ESPO. ESPO is expected to handle about 200,000 tonnes of hydrocarbons before the end of the year.

The ESPO pipeline is being built to transport oil to the prospective Asia-Pacific market. The first phase of the pipeline was to be launched in October-December 2008. But the date was put off until the 4th quarter of 2009. The Federal Tariffs Service set the rate for Transneft on the pipeline's reverse stretch at 981.64 rubles per tonne.

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