Russian oil pipeline monopoly Transneft will start construction on Thursday of a $1.34 billion pipeline link to help secure crude supplies to a major route feeding energy-hungry China. The 430 kilometre Purpe-Samotlor pipeline is scheduled to be commissioned in 2012 and will speed up oil deliveries to China from the huge Vankor oilfield in the Arctic, which belongs to state-run Russian oil industry leader Rosneft. The link will also help Russia's third biggest oil producer, TNK-BP , to develop new Siberian fields.
"We will weld the first joint on Thursday, and plan to complete the link at the end of 2011. The launch is planned for 2012," Transneft spokesman Igor Dyomin said to Reuters. He said the Purpe-Samotlor link would initially carry 197.5 million barrels of oil per year. Capacity is scheduled to double in the future. The pipeline will shorten the way to the East Siberia-Pacific Ocean (ESPO) trunk, Russia's first oil pipeline link to China. The link will replace a longer and more outdated route currently in place.
Bank of Moscow analyst Denis Borisov said the capacity of the existing pipeline system in the region was insufficient to carry the oil from Vankor and other new fields. He said the new route would also cut the delivery distance by up to 100 kilometres. The new link, close to TNK-BP's major Samotlor field, would also allow the company- half-owned by BP - to develop new fields, Borisov said. "It will help launch TNK-BP's oilfields, such as Suzun and Tagul," he said.
Last year, China lent Rosneft and Transneft a combined $25 billion from its cash pile in return for guaranteed supply of 2.4 billion barrels of Siberian oil over the next two decades.