June 24 (Bloomberg) -- OAO Transneft plans to draw down half of a $10 billion loan from China before the end of the month as Russia’s state-run pipeline operator boosts capacity.

“By the end of June it will be $5 billion,” Transneft President Nikolai Tokarev said in an interview in Moscow yesterday. The company will receive the second half of the loan by the end of the year, he said.

Transneft plans to add 30 million tons of pipeline capacity by the end of the year in the Far East. Half of that will go to China after a pipe spur is completed next year as part of a deal providing loans for oil supplies. China Development Bank Corp. has agreed to provide $15 billion in loans to OAO Rosneft, Russia’s largest oil producer, and $10 billion to Transneft.

The remaining 15 million tons of crude will be transported by rail to Russia’s Pacific Ocean port of Kozmino.

“In December the first tanker should sail from Kozmino,” Tokarev said. Further phases of the East Siberian Pacific Ocean pipeline envisage extending the link to the Pacific port to further increase capacity.

The initial resource base for the East Siberian pipeline will come from West Siberia and new regions, such as OAO Rosneft’s Vankor, north and east of Russia’s traditional output region.

Working Group

Transneft has set up a working group with oil producers in the region, including Rosneft, TNK-BP, OAO Lukoil and Gazprom Neft, to build a 50 million-ton capacity connector pipeline in the region from Purpe to Samotlor by 2012, Tokarev said.

The pipeline would allow producers to send exports west or east, free of transit limitations, to wherever they find the best market, Tokarev said.

Transneft has been working with Komatsu Ltd., a maker of construction machinery, in building the remote East Siberian pipeline, and is now in talks with Caterpillar Inc., the world’s largest maker of bulldozers and excavators.

It would be “premature” to expect any contracts with Caterpillar to be signed during U.S. President Barack Obama’s visit to Russia next month, Tokarev said.

Russia is also seeking ways to build another regional pipeline to connect the Arctic Yamal-Nenets region, Tokarev said.

Bond Sale

Transneft has received 35 billion rubles ($1.1 billion) from sales of so-called infrastructure bonds, which it will use to construct the Baltic Pipeline System-2, or BTS-2. The pipe will have the capacity to carry 30 million tons of crude to the Russian Baltic Sea port of Ust-Luga by the third quarter of 2012, Tokarev said.

The pipe will provide security for European exports should Ukraine go ahead with plans to export oil from the Black Sea to Europe through a link from Odessa to Brody. Ukraine’s export plan for oil produced in the Caspian region, mainly from Kazakhstan and Azerbiajan, could block two branches of Russia’s main Druzhba export pipeline network to Europe, Tokarev said.

Europe could receive the estimated 25 million tons a year it currently takes through Odessa Brody and Druzhba via Ust- Luga, Tokarev said. Transneft has said that Kazakh oil could also be transported via the BTS-2, which may in the future be expanded to carry 50 million tons.

Port Stake

Transneft is currently building its own oil terminal within the port of Ust-Luga and may take a stake, the size of which is yet to be decided, in the company that runs the entire port complex to give it a say in the overall project, Tokarev said.

Tokarev said Transneft doesn’t have any current plans to raise capital.

Chevron Corp. and Transneft have set a goal to complete all necessary preparations by the end of this year for work to go ahead on the expansion of the Caspian Pipeline Consortium, or CPC, Tokarev said. The pipeline venture that delivers crude from Chevron’s Tengizchevroil venture to the Russian port of Novorossiysk aims to double capacity to 67 million tons a year.

Russia also plans to make a decision with KazMunaiGas National Co., the Kazakh state-owned energy company, and its KazTransOil transport unit, in the next two years on adding 10 million tons of capacity to a pipeline from Kazakhstan’s Atyrau to Russia’s Samara region, Tokarev said. The two sides are discussing how to compensate for the value of higher quality Kazakh oil being blended with Russia’s Urals export blend.

The pipe carried 17 million tons last year, Tokarev said.

Transneft and Russian Railways are likely to come to a decision in the coming weeks on creating a venture to work together on transit supplies from the East Siberian Pacific Ocean pipeline’s current endpoint in Skovorodino to Kozmino, Tokarev said.

To contact the reporter on this story: Stephen Bierman in Moscow sbierman1@bloomberg.net.

Last Updated: June 24, 2009 04:01 EDT