China Pipe Plan Seen on Track

The government said Thursday that it was sticking to plans to launch its first oil route to China in 2008 despite confirmation from pipeline monopoly Transneft that it was facing serious construction delays.

Industry and Energy Minister Viktor Khristenko said the schedule to complete the first $11 billion, 600,000 barrel-per-day section of the pipeline by the end of 2008 was still in force.

"The company [Transneft] indeed has some difficulties on certain parts of the route, with certain contractors. But we have not revised the schedule," Khristenko said.

Transneft, which is building the route from East Siberia to Scovorodino near the Chinese border, said a recent inspection had confirmed serious problems but did not say if the start-up would be delayed.

"The management board highlighted that construction work was falling seriously behind schedule and that there was no construction work at all on a 704-kilometer section, representing 26 percent of the whole route," Transneft said in a statement. The firm said the first phase pipeline was 41 percent complete instead of a projected 60 percent, while pumping stations were 24 percent ready instead of 56 percent.

The newly appointed head of Transneft, Nikolai Tokarev, has already said his firm was three to four months behind schedule in constructing the pipeline, as some contractors had failed to deliver work on time.