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ESPO Overruns Estimate
Industry and Energy Ministry has acknowledged the failure to timely elaborate the flow diagram for the first stage of Eastern Siberia – Pacific Ocean Pipeline (ESPO). Both the construction dates and the official budget of project will be probably revised. According to analysts, the delay roots in the absence of decision for the ESPO tariff rates. Exporting crude oil to the east will be hardly profitable for the companies without the government subsidies.
Energy and Industry Minister Viktor Khristenko has acknowledged they failed to accomplish the government’s order and elaborate the flow diagram for the first stage of Eastern Siberia – Pacific Ocean Pipeline by the third quarter of 2007.
“The diagram isn’t ready,” the minister said Thursday, pledging to make it out “if not this year, then in the first months of the next year.” Therefore, the order given to Federal Tariff Rates Service to submit by December 15, 2007 the proposals on ESPO tariff rates won’t be implemented either.
The ESPO project that is targeted at supplying crude oil of Eastern Siberia to the Asian and Pacific countries and to the United States is implemented in two stages. The first stage provides for constructing Taishet-Skovorodino section of 2,700 kilometers and an oil loading terminal in Kozmino bay with capacity of 30 million tons. The work was due to be completed by the end of 2008.
The plans are to construct a branch to China for account of CNPC. The crude oil for the first stage of pipeline facilities will be supplied from explored fields of Western Siberia.
The budget of the first stage was estimated at $6.6 billion in 2004 and the tariff rates for supplying crude stood at $38.8/a ton. In 2006, however, the cost of ESPO project stepped up to $11.3 billion, while today’s estimate exceeds $13 billion. But raising the tariff rates for supplies via ESPO will make the project inefficient. The railway rates for Skovorodino-Nakhodka deliveries don’t exceed $44/a ton.
www.kommersant.com
All the Article in Russian as of Nov. 26, 2007
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