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Transneft to Finish Pipeline to China by 2010

MOSCOW — Russia's oil pipeline to China is due to be completed by the end of 2009, and users will be charged an export tariff of $30 to $35 per ton to deliver crude along the 2,700-kilometer route, Russia's oil pipeline monopoly said on Thursday.

The construction of the pipeline had been delayed several times and was one of the reasons behind a reshuffle of the state-controlled monopoly's management in 2007.

"The pipeline is almost filled with oil. Preparations for the pipeline's commissioning are under way," Transneft President Nikolai Tokarev said, adding that the trunk pipeline could start pumping crude eastward on Dec. 15, a few days ahead of schedule.

He said zero-export duties on oil from East Siberian fields were likely to be applied retroactively from Oct. 1.

In July, Russia's government decided to introduce the long-awaited, zero-export duty for 13 huge oil fields in Eastern Siberia in a bid to help crisis-stricken oil companies and boost crude production, although the decision is yet to be implemented.

According to Tokarev, who became Transneft president in 2007, the issue is being reviewed by the Justice Ministry. "I think the duty will be retroactive to Oct. 1," he added.

Tokarev said the oil, which will eventually be shipped to the Pacific port of Vladivostok through the second phase of the link, would also be of interest to South Korea and Japan. Japanese companies were looking into upstream projects in Eastern Siberia.

"Japanese companies showed readiness [to step in] and are now considering participation in upstream projects in Eastern Siberia," he said without elaborating.

Transneft aims to invest 190 billion rubles [$6.51 billion] in its main projects next year. It has no plans to increase "excessively" the tariffs now in place for the company's pipeline system, as they are already high, Tokarev said.

Major oil exporter Russia is building the pipeline to move oil from huge new fields in Eastern Siberia to energy-hungry Asian markets, a move that will also diversify Moscow's energy reach beyond its traditional markets in Europe.

The first stage of the East Siberian-Pacific Ocean (ESPO) pipeline will have capacity to move 30 million tons a year (600,000 barrels per day) from the town of Taishet to Skovorodino, from where a spur will run to the Chinese border.

Transneft is set to start the second stage of the link's construction, to the sea port of Kazmino, near Vladivostok, next year. The second link is planned to be finished in 2014 and until then, oil will be shipped to the Pacific Ocean coast by rail.

Earlier on Thursday, a first cargo of oil arrived to Kazmino, and at least one tanker will ship crude from the port in December, Tokarev said.

"South Korea and Japan [besides China] showed interest in this oil too. ... The demand and deficit are massive."

Bulgaria's new government was hesitating over whether to implement Russia-sponsored energy projects, including an oil link from the Bulgarian Black Sea port of Burgas to the Greek port of Alexandroupolis on the Aegean Sea.

In August, Russia asked Bulgaria to clarify its stance on energy projects that it had committed to, Tokarev said.

"We are interested in some clarity. It's the end of October now, but no one from Bulgaria answered us."

Last month, Bulgarian Prime Minister Boyko Borissov said his country would decide on the projects in November.

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