TNK-BP, Rosneft change plans on E. Siberia pipeline

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TNK-BP [RTS: TNBP] said Friday it had reached am agreement with Rosneft [RTS, LSE: ROSN] on building a regular oil pipeline in East Siberia instead of a previously coordinated provisional route.
MOSCOW, September 1 (RIA Novosti) - TNK-BP [RTS: TNBP] said Friday it had reached am agreement with Rosneft [RTS, LSE: ROSN] on building a regular oil pipeline in East Siberia instead of a previously coordinated provisional route.

Verkhnechonskneftegaz, a regional energy company licensed to develop the Verkhnechonsk hydrocarbon deposit and in which TNK-BP and Rosneft own 62.7% and 25.94% respectively, will build a pipeline from the site to the Talakan deposit, operated by oil and gas company Sugurtneftegaz, to link it to the East Siberia-Pacific Ocean oil pipeline.

The ESPO is an ambitious project Russia is developing to pump oil from Siberia to Russia's Far East for exports to the Asia-Pacific region, particularly to energy-hungry China.

"Discussions with Sugurtneftegaz are being conducted through OJSC Verkhnechonskneftegaz (VCNG), the operating company for the VC [Verkhnechonsk] field, pursuant to the terms of a Memorandum of Understanding signed by these companies," TNK-BP said in a news release. "Agreement in principle with Transeft, the operator of the ESPO, has also been reached."

The change to the original plans has been enabled by the re-routing and confirmation of timing of works on the ESPO and the stated intention of Transneft to commission reversal of the Ust-Kut -Talakan pipeline section.

TNK-BP said it had signaled its intention to accelerate the construction of the supply pipeline from the Verkhnechonsk deposit to align with Transneft plans. The Russian-British joint venture also said Verkhnechonskneftegaz had already started surveys along the proposed pipeline route.

"In the near future the company will hold a tender among Russian design institutes for the right to develop the feasibility study for construction of the 120-km (75-mile) line to the cut-in point of the main ESPO," the release said.

The Verkhnechonsk deposit is at the center of Russia's plans to be the dominant energy supplier to Asian markets. Exploratory drilling is yet to be completed, but its probable and possible reserve base is estimated at 1.48 billion barrels of oil, 129 billion cubic meters of natural gas and 25 billion barrels of condensate - enough to meet China's current oil import needs for more than two years.

Construction on ESPO, preliminarily estimated at $11.5 billion, started in April 2006. Since then, more than 100 kilometers (62 miles) have been laid and 330 kilometers (205 miles) have been prepared for pipe installation.

In April, President Vladimir Putin ordered the pipeline re-routed from its original path, which would have seen it run within 800 meters of Lake Baikal, the world's largest body of fresh water, to be no closer than 40 kilometers from the lake. And in May, Transneft head Semyon Vainshtok said the new route would be 10 times farther away than Putin had suggested should be the absolute minimum.

The plan had been at the center of controversy and protests by environmental groups, who said Lake Baikal, a Unesco-listed World Heritage Site, could suffer irreparable damage in the event of an accident on the pipeline.

The first stage of the project, which is slated to pump up to 80 million metric tons of crude a year (1.6 mln bbl/d) from Siberia to Russia's Far East, will connect Taishet in the Irkutsk Region to Skovorodino in the Amur Region in the Far East in the second half of 2008. The second stage will link Skovorodino to the Pacific coast.

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