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    Russia's pipeline operator fears new delays in ESPO project

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    MOSCOW, September 2 (RIA Novosti) - Transneft fears new delays could hit the construction of the East Siberia-Pacific Ocean oil pipeline after problems with contractors, the Vedomosti daily said on Tuesday.

    Russian Prime Minister Vladimir Putin signed government instructions on Sunday to speed up the construction of the pipeline and to prevent delays. The first leg should go on stream in the fourth quarter of 2009, though it was initially expected to be launched at the end of 2008.

    Transneft said the company has complained to Sulzer, a Swiss producer and supplier of pump equipment, and its Russian dealer SOT, Vedomosti quoted Transneft vice president Mikhail Barkov as saying.

    Tycoon Viktor Vekselberg's Renova owns over 30% in Sulzer.

    Under a 2006 contract, SOT and Sulzer were to supply 41 pumps worth around 7.4 billion rubles ($299.96 million), Barkov said. The bulk of the equipment was supplied up to 12-28 days late. However, Transneft said the main problem was that some of the equipment delivered turned out to be defective, which delayed a number of tests causing hold ups of a further 31-61 days, the newspaper said.

    The defects have also pushed up costs, and a Transneft subsidiary involved in the construction of the pipeline filed a legal claim worth 19 million rubles ($770,166) against Sulzer in late August.

    Either Sulzer or Renova were unavailable for comment, when Vedomosti contacted them.

    However, Transneft said it was not in a position to breach its contract with Sulzer as it could result in even more delays to the project and billions of rubles in legal claims and additional costs, Barkov warned.

    Analysts said the new problems have unnerved Russian oil company Surgutneftegaz, whose Talakanskoye field is now locked in East Siberia.

    No one was available for comment at Surgutneftegaz, based in the Tyumen Region in West Siberia, on Monday, the newspaper said.

    The ESPO pipeline is slated to pump up to 1.6 million barrels of crude per day from Siberia to Russia's Far East and then onto China and the Asia-Pacific region.

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