Transneft Considering Second Crude Pipe to Asia as Deficit Looms

OAO Transneft is considering a second pipeline to Asian markets to counter a capacity deficit via the East Siberia-Pacific Ocean crude oil channel.

“Today’s agenda includes the issue of building a second ESPO,” Chief Executive Officer Nikolay Tokarev told journalists today in Komsomolsk-on-Amur in Russia’s Far East. “I mean one with the same capacity” as the existing pipeline, he said.

The $22.3 billion ESPO pipeline, Russia’s most expensive infrastructure project, has helped domestic companies pivot to energy-hungry Asian markets from Europe, where demand is stagnant. OAO Rosneft signed this week a preliminary agreement to sell 200,000 barrels a day to China Petrochemical Corp. for 10 years from 2014, in addition to a 25-year, $270-billion supply deal it struck in June with China National Petroleum Co.

Transneft, Russia’s oil pipeline monopoly, is alternatively considering the expansion of the existing ESPO pipeline system, Tokarev said. The project may boost the capacity of ESPO-1 to Skovorodino near the border with China to 80 million metric tons a year from 50 million tons currently, while the ESPO-2 link to the Pacific port of Kozmino may grow to 50 million tons a year from 30 million tons now, he said.

To contact the reporters on this story: Jake Rudnitsky in Moscow at jrudnitsky@bloomberg.net; Stepan Kravchenko in Moscow at skravchenko@bloomberg.net

To contact the editor responsible for this story: Stephen Voss at sev@bloomberg.net

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