Producers Pin Hopes On New Oil Pipelines

It's a new twist on the old "Great Game" ю not who's going to control Central Asia and its massive oil wealth, but who's going to transport the fuel to Western markets. Russia, for one, wants in on the action and is hoping, all in one swoop, to dominate shipment of Central Asian oil and regain control over its own exports, an advantage it lost when the fall of the Soviet Union shifted its borders hundreds of miles further from Europe. Pipeline development throughout Russia and Eastern Europe has been quite active over the past few years, with new routes coming on line or moving further along the drawing board. And while the driving force is clearly the vigorous development of Caspian resources, the steady growth of oil production in Russia and the record-high oil prices over the last two years have also played their role. Last but not least, Russia's desire to regain control over the transport of its resources, which it lost with the fall of the Soviet Union, and the country's desire to tap new markets have also been decisive factors. "Russian oil exports increased by a hefty 9 percent in the first three quarters of 2001, including oil from Kazakstan," said Valery Nesterov, an oil analyst at Troika Dialog. "At the moment, the pipeline system is nearly being used at full capacity. These new projects are going to ease the situation of transporting oil to foreign markets." In Russia, strong output growth over the past two years has led to near-record export levels of 155 million tons this year and an expected 160 million tons next year, forcing pipeline monopoly Transneft to scramble to avoid export bottlenecks. What's more, development of new fields in the Far North and Eastern Siberia do not mesh economically with the existing pipeline system. To make matters worse, the fall of the Soviet Union handed key sections of pipeline over to Ukraine and the Baltic States, forcing Russian exporters to pay large transit fees. As a result, Russian officials have spent y ears trying to open new pipeline routes that would reduce that dependency and increase income to the government, Russia Journal wrote.

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