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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 Republic.


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 Mediterranean Sea.

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 pipeline.

Rovshan Ibrahimov,


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