Transneft Is out of Murmansk Pipeline Project Development

According to Sergei Grigoriyev, the Transneft oil transportation company's Vice-President, Transneft will have no part in the project for the developing of a pipeline between West Siberia and Murmansk. Mr. Grigoriyev explained this by saying that, 'The project is being developed by oil companies in order to pressure the government, and we stay out of politics. There is no project yet. All there is so far is intent, while the oil companies are not yet even certain about the route.' Besides, he said he had doubts as to the ability of the participants of the oil alliance to use the pipeline to capacity because oil exports would grow with the growth of the Baltic Pipeline System to an annual capacity of 42 million tonnes and the construction of the Far Eastern Transport Corridor to handle annually another 20 to 50 million tonnes. In 2002, Mr. Grigoriyev noted, the whole Russia's oil export came to 190 million tonnes. So he could not see how the oil companies could come up with 80 more million tonnes to transport through the Murmansk line. According to the law, no more than 30% of the total production may be exported while, according to forecasts, no more than 450 million tonnes of oil may be produced annually by 2010.

Using this project, oil companies are trying to pressure the government to lower tariffs on oil transportation through trunk pipelines or, Mr. Grigotiyev said, 'Slip from under the government's control altogether, as concerns exports.' He also suggested that this might be an attempt to shift all export oil flow toward Murmansk. Since the pipeline is projected as privately owned, the government will have no way to control export volumes.

Mr. Grigoriyev further said that the government might be about decreeing the extension of the 12 million tonnes annual capacity of the Baltic Pipeline System by another 30 million tonnes. The Transneft oil transportation company is 100% government-owned. Every trunk pipeline in Russia, with the exception of the one owned by the Caspian Pipeline Consortium, are owned by the government. According to the Memorandum issued by the LUKoil, Sibneft, TNK, YUKOS, and Surgutneftegaz oil companies, a feasibility study and technical documentation for the project should be completed between 2004 and 2007, the latter year being also the time for the pipeline' to go into operation. The projected annual flow of 80 million tonnes may expectedly be increased to 120 million tonnes at a later time. The estimated cost of the project6 is between USD 3.4 billion to USD 4.5 billion.

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