Transneft borrows to build new pipeline

Thu, 31 August 2006

RUSSIA’S Sberbank signed a credit agreement on 7 August with the Transneft oil pipeline monopoly to finance the first stage of the East Siberia-Pacific Ocean pipeline project. The credit facility includes a six-year revolving credit line of $2.43 billion, and a non-revolving credit line of $748 million. The project involves construction of an oil pipeline from Taishet in the Irkutsk region through Skovorodino in the Amur region to the Pacific Ocean. The capacity of the pipeline is put at 80m tons/yr.

The project will be implemented in two stages. During the first stage, an oil pipeline will be built from Taishet to Skovorodino, with a capacity of 30m tons/yr, and an oil terminal will be constructed in the Primorsk region on the Pacific coast. The first stage of the project is scheduled to be completed in the second half of 2008. The project will be implemented in two stages. During the first stage, an oil pipeline is being built from Taishet to Skovorodino, with a capacity of 30 million tonnes of oil a year, and an oil terminal will be constructed in the Primorsk region on the Pacific coast. This stage is scheduled for completion in the second half of 2008. In the second stage, the pipeline will be built onwards from Skovorodino and Perevoznaya Bay in the Primorsky region on the Pacific coast. This leg will have a capacity of 50m tons/yr, and is expected to be completed in 2015. Construction of the first stage began at the end of April in Taishet, and it is reported that the pipeline is currently progressing at between 200 and 300m/day. The pipeline route was initially planned to go alongside Lake Baikal, but in April President Putin asked Transneft to lay the pipeline as far from the Lake as possible. The new route now runs 400km away from the Lake, increasing the length of the pipeline by 370km. Japan has expressed interest in the project, and has asked for state guarantees from President Putin; however, he said that this was a commercial project and no state guarantees could be given. Vneshtorgbank also is hoping to participate in the project, and its president Andrei Kostin said the bank was one of few banks capable of financing projects valued above $1 billion. "We are prepared to take part in this project, in one way or another," Kostin said. The construction of the East Siberia-Pacific Ocean pipeline is seen as an important stage in opening new markets for Russia, and giving a new impetus to the development of East Siberia and the Far East of the country. Transneft is owned by the Russian government. The Federal Agency for Management of Federal Property holds 75% of the company's voting shares, while private shareholders hold the remaining 25% of preference shares.