Oil shortage may delay second phase of East Siberia pipeline
Construction of the second leg of the Asia-bound East Siberian pipeline could be postponed by several years from its original March 2008 deadline over delays in developing the mineral base, a ministry official said according to RIA Novosti.
"Failure to meet mineral base targets may delay the construction of the second phase of the pipeline by three or four years at best," Sergei Fyodorov, head of geological and mineral resources department in the ministry, told a Russian energy forum in St. Petersburg.
The first $11-billion leg of the pipeline came on stream last April and is expected to link Taishet near the East Siberian city of Irkutsk to Skovorodino in Russia's Far East.
The second leg is to run from Skovorodino to Kozmino on Russia's Pacific Coast. The construction of the end terminal in Kozmino Bay was expected to begin in April, and the first oil deliveries to start 11 months later.
A decision on launching the construction of the second leg, with a projected capacity of 50 million metric tons (366.5 mln bbl), depends on filling the first leg, which has a projected capacity of 30 million metric tons (220 mln bbl) by the second half of 2008, and on the development of East Siberia's mineral base, Fyodorov said.
Sergei Grigoryev, vice president of Russia's state-owned pipeline monopoly Transneft [RTS: TRNF], said the starting date for the construction of the second leg could not be postponed because it had never been set.
"We only spoke about building the first leg, and the decision on the second leg will depend on how well the first leg is filled up," he said, adding the date would also depend on oil workers who are expected to replace West Siberian oil in the pipeline with East Siberian crude, and to increase the filling to meet the target of 30 million metric tons.
Two Russian state-controlled crude producers, Rosneft and Surgutneftegaz, said last month they would provide 27 million metric tons a year (542,219 bbl/d) to the Asia-bound pipeline from 2008 as operators of two East Siberian oil fields.
Fyodorov said the Ministry of Natural Resources would draft proposals by late May to increase budget funding for geological prospecting in East Siberia. He called for additional budget allocations of $38.5 million annually for parametric drilling as part of geological surveying. "A new impetus is needed to fill the pipeline," he said.
Budget allotments for geological surveying in East Siberia were $77 million in 2005-06. Total budget spending on geological prospecting in 2006 was $635 million, and will be $730 million in 2007.