Prospects of The Russian Oil Pipeline to The West, Advantages
And Disadvantages of Current Infrastructure
Russia stands as one of the leading operators in the
international oil business, being on of the 10 largest oil
exporters in the world. In 2000, Russia exported about 145
million tons of crude oil and 50 million tons of oil products.
Oil and oil products are the major sources of revenue for
Russia, and account for nearly 40% of total exports. According
to the forecasts of the Russian Ministry of Economic
Development, oil production in Russia will reach 496-515 million
tons by 2010 and to 507-540 million tons by 2015-mu. However,
the export of crude oil is confronted with the problem of
transportation, which on the other hand could lead to an
increase in exports of ready oil products.
One of the reasons that could lead to restrictions of the export of
crude oil from Russia is the fact that the export pipeline
transportation of crude oil is under the ruling of the state
monopoly Transneft, which was established in 1993. This reason plays
a major role in preventing of the private investment in pipeline’s
infrastructure development. Lack of capital in urgent moment for
investment by Transneft in infrastructure in case of defects, can
severe damage production companies.
Currently, Russia’s totally has about 350,000 km pipeline, about
2,500 km pipeline including foreign owned by private oil companies,
, as well as 50,000 km pipeline belonging to Transneft. The system
has 355 stations for the transfer of oil and 861 tanks for the
storage of oil a total capacity of which is about 14 million cubic
meters. At the moment, from existing pipelines infrastructure can be
exported only 4 million barrel of oil per day, while the rest oil
transported by the river with tankers and the railways. In 2002, 55%
of Russia's oil exported by sea, 40 %, through the pipeline Druzhba
and about 5% by rail.
One of the problems that arise in the export of Russian ready oil
product is their poor quality. The lack of diesel fuel with low
sulphur content reduces attractiveness of the product in the EU
markets, where the claim of low ingredient is required. This reason
is holding the export of crude oil at current levels.
It should be noted that the main importers of oil from Russia are
Britain, France, Italy, Germany and Spain. Currently, the export of
petroleum in the United States tempered by the knowledge that the
costs involved in transporting Russian oil to this country is much
higher than that of the Middle East producers.
One of the ways for exporting of oil through Russian territory in
the western area is 2,500 miles Druzhba pipeline with a capacity of
60 million tons per year. This pipeline originates in southern
Russia, near Kazakhstan, where it pumped with the oil from the Urals
and the Caspian Sea region. When, this pipeline crosses border of
Russia with Belarus, where it divided into the northern and southern
branches of the plant. The northern branch passes through Belarus
and Poland to Germany, while the southern crosses the North of
Ukraine and passes through Hungary and Slovakia, ending in the Czech
Transport performance of Druzhba pipeline to Slovakia is about the
20 million tons of oil a year. The northern highway now fully
loaded, while the southern has a reserve capacity and Russia is
seeking to increase its power by merging the southern branch Druzhba
into the Adria pipeline.
Adria pipeline passes through a deep Croatian port of Omishal, which
is in the Adriatic Sea and built to pump oil coming from the Middle
East and transport it to the rest of the route to the north of the
former Yugoslavia and Hungary. However, subsequently, when it was
shifted in the direction of the flow of oil, Russia, through
accession to the Adria pipeline Druzhba gained access to the
Adriatic Sea. Maximum power Adria pipeline limited to 300,000 barrel
oil a day.
The instability of Druzhba pipeline revealed, in January 2007, when
Belarus in response to the increase of the gas price by Russia
established its transit taxes for Russian oil resulting in the
suspension of transit to Europe. In addition, Belarus himself canned
pipeline passing through its territory and got 80 thousand tons of
crude oil, to meet the needs of own refinery factories. Such a
situation may arise in the future, in the case of worsening
relations between the countries.
Another export transport network, which serves as a way for Russia
to the western markets, is the Baltic Pipeline System. Through these
pipelines capacity of which is about 74 million tons per year, crude
oil from Western Siberia, Urala-Povoljye and Temeno-Pecorsk
oilfields carried to the port of Primorsk, on the shore of the Fin
Gulf. From the first day of BPS has projected to export of
production of about 12 million tons of oil a year. Through Primorsk
which reduced dependence on the trans-Baltic countries export
realized oil to the markets of the Nordic countries. Transportation
costs from BPS is 3-4 dollars per ton lower than the cost of the
route through Ventspils (Latvia). Services transit countries such as
Latvia, Lithuania, Estonia and Finland, costing Russia more than a
billion dollars a year.
Although this fact favoured Primorsk port but it has the drawback
because of the size restrictions for tankers belonging to the port.
It should be noted that, when the Baltic pipeline will be
constructed till to the ports Murmansk and Indiga, Russia will
enable to export 1.6-2.4 million barrels of oil a days to the
American market and transportation will take only 9 days that much
faster than the transport of oil from the Middle East or Africa.
However, Murmansk range distance from the major oil fields and
freezing Indiga port in the winter months, are negative factors in
the implementation of these projects.
One of the major export Russia’s port in the Black Sea is
Novorossiysk, through which the bulk of the flow of Russian oil. Oil
is delivered here by Samara-Tihoreck pipeline to Novorossiysk, some
portion of crude oil also comes from Baku and Makhachkala. After the
increase to 15 million tons of oil per annum capacity pipeline
Atyrau (Kazakhstan)-Samara (Russia), increased attractiveness of
this route for Kazakhstan. Hence the oil across the Black Sea is
transported to the Mediterranean and then to the Asian markets. But
oil transport in this area is limited to the fact that the tankers
are obliged to cross the shallow and busy Bosporus Straits, and as a
result of which Turkey imposed restrictions on the passage tankers
through the Straits in case of safety and the environment, thus
decrease efficient transport of oil from Novorossiysk.
Right now potential capacity of Transneft pipeline network allows
supplying about 226 million tons of crude oil per year for the
states outside the former Soviet Union. Such as, the 78 million tons
can be exported in the northern direction, 66 million tons in the
western and 67 million tons via Black Sea. Further development of
the first two directions of which is transit dependence on
neighboring countries is not foreseen.
At the same time Russia intends to increase the export of oil
through the Black Sea ports. To this end Russia plans to solve the
problems of restricted access of Turkish straits through
construction of pipeline Burgas (Bulgaria)-Alexandropolos (Greece).
In order to implement the project on the oil pipeline from Bulgaria
to Greece, which will be back of Turkish straits was established
Pipeline Consortium by such companies such as Transneft, Rosneft and
Gazpromneft. Transneft has 33.34% in a new consortium and Rosneft
and Gazpromneft each of 33.3%.
It is expected that the pipeline extends for a distance of 279 km.
In the first phase transport of oil from this pipeline will be
between 15 and 23 millions tons per year, followed by the expansion
of it’s to 35 million tons per year. In addition to that in
perspective Russia planned to export oil under the Black Sea through
projected Samsun (Turkey)-Ceyhan (Turkey) pipeline to the
According to the specialists, the increase in oil production and,
consequently, in its exports, growth which could reach up to 300
million tons of oil a year, points to the fact that the present
capacity of the pipelines to export of Russian oil to western
markets may not be sufficient. If we added to that figures also
increasing the volume of oil exports in countries such Azerbaijan
Kazakhstan and Turkmenistan which are partly using Russia
infrastructure to enter into the western markets, it can be easily
added that today Russia should think about alternative routes to
export oil in a western direction. Solving the problem could be a
potential increase in the capacity of the existing ways to export
oil, the restoration of oil transit through the country, in this
case, in the Baltic area and the use of existing in the region of
alternative ways to market entry mainly Baku-Tbilisi-Ceyhan