By John Helmer in Moscow
Russia’s state-owned crude oil pipeline company Transneft will commence loading oil tankers at Kozmino, the newest Russian oil port to be launched, as soon as December. With eventual capacity to load and ship 50 million tonnes per year (1 million barrels per day), Kozmino is to be one of the largest oil outlets opening on to the Asian and Pacific market.
Starting this year, Igor Demin, spokesman for Transneft, told 21st Century Business Herald that Russian rail deliveries of up to 15 million tonnes of crude oil (300,000 bd) will be loaded at the new port. Five million tonnes of that (100,000 bd) are already committed by contract to be shipped to China, under loan and oil supply contracts recently signed in Beijing by Transneft and Rosneft with the China Development Bank and the China National Petroleum Company.
Another 15 million tonnes (300,000 bd) of Russian crude are committed, according to the same contracts, for delivery to northern China through the new overland pipeline being built from Skorovodino to the Chinese border. In four years’ time, as Transneft builds the rest of the planned pipeline from Skorovodino to Kozmino — called the East Siberian Pacific Ocean, or ESPO, pipeline — a total of 80 million tonnes (1.6 million bd) of new Russian crude will flow for export eastwards. Of that amount 30 million tonnes (600,000 bd) are already committed for delivery to China by the northern overland pipeline and from Kozmino port.
Demin also revealed that about 3 million tonnes of the new oil will go to domestic Russian refineries, including a new one to be built by state oil company Rosneft, located 4 kilometres from the terminus of the ESPO pipeline and the tanker terminal at Kozmino Bay. Demin’s disclosure of the 3-million tonne capacity at the new refinery is substantially below previous published estimates. This hints at competition between the two state companies, Transneft and Rosneft. It also suggests that Transneft sees more profit for itself in exporting crude through Kozmino, rather than delivering the crude for Rosneft to refine, and then export as petroleum products.
Until the ESPO pipeline opens in 2013, Demin said he expects 7 million tonnes pa (140,000 bd) of rail-delivered oil will be traded on spot or contract terms from Kozmino, starting at the end of this year. Demin said that South Korean buyers have already signaled interest in this crude, and that Chinese buyers will also be able to buy on spot-price terms.
Kozmino is wholly owned by the Moscow-based pipeline company, Transneft. Transneft also has a controlling stake in the Baltic oil export port of Primorsk, which was built recently on the Gulf of Finland, and which is currently shipping between 120,000 bd and 140,000 bd.
A second Russian outlet on the Gulf of Finland, also to be supplied by Transneft, is at Ust-Luga. This oil port is controlled by the Russian oil trader, Gunvor. Transneft has significant shareholding positions too at the Novorossiysk port, Russia’s principal export outlet through the Black Sea to southern Europe.
The new Kozmino port plan, together with the ESPO and China pipeline arrangements, backed by Chinese financing of $25 billion, make certain that the new Siberian oilfields, such as Rosneft’s Vankor field in central Siberia, will move oil eastwards to Asian markets, rather than westwards to Europe. This geostrategic shift of Russian energy flow has been a Chinese objective for years. If oil demand conditions remain volatile, spot trading of Russian oil from Kozmino is likely to give Asian buyers a price advantage, and put pressure on Middle Eastern suppliers.