Transneft Pushes for Pipe to Persian Gulf

ALMATY, Kazakhstan — Oil pipeline monopoly Transneft is stepping up its efforts to develop a pipeline route across former Soviet Central Asia and Iran to the Persian Gulf, company chief Semyon Vainshtok said Friday.

Vainshtok was speaking in the Kazakh commercial capital, Almaty, on a brief visit to meet local oil companies.

"As far as the route from Omsk through Pavlodar, Chimkent, Chardzhou and Neka to Tehran is concerned, we are now completing work on establishing this route with [Kazakh state oil company] Kazakhoil," Vainshtok told reporters.

"We have completed a technical audit of the status of the whole length of the existing pipeline system, with the exception of the stretch in Turkmenistan, where this work is still under way," he added.

He said the outlook was very favorable for delivering Russian and Central Asian crude to Tehran and receiving Iranian oil under a swap system at the Gulf.

He put the rise in Russian crude output at around 20 million tons per year (400,000 barrels per day) and said that "today the need for a new export route has become a reality."

"We are looking very seriously at the question of diversifying export routes. We are going to the Baltic, and we are actively working on the Adriatic route with the possibility of exporting through the deep water port of Omisalj in Croatia."

He said Transneft's first priority was to use the new Baltic Pipeline System, due to come onstream in December, which will connect fields in northern Russia with a new terminal under construction at Primorsk on the Gulf of Finland.

Its initial capacity will be 12 million tons per year, of which Vainshtok said 5 million tons could be Kazakh crude.

He added that Kazakhstan, as a growing crude producer, was of great interest to Transneft. Crude output is expected to exceed 40 million tons this year (800,000 bpd), and with gas condensate the total could reach over 950,000 bpd.

Much of this now goes through Transneft's system, with capacity on a pipeline from Kazakhstan's oil capital, Atyrau, to Samara on the Volga in Russia rising to 15 million tons per year (300,000 bpd).

But there are plenty of other contenders. On Aug. 6, a new line built by the Caspian Pipeline Consortium will be formally opened at the Russian Black Sea port of Novorossiisk.

This line, with an initial capacity of 560,000 bpd, will be the first to deliver Kazakh crude direct to world markets.

Another route, from Baku in Azerbaijan to Ceyhan on the Turkish Mediterranean, is receiving massive backing from the U.S. government and has the support of BP, which is developing the Azeri fields that will initially feed the line.

At the same time, France's TotalFinaElf is working on its own study of a line crossing Iran. But Vainshtok was at pains to point out that Transneft would be able to handle larger volumes of Kazakh crude.

"We confirm today that all volumes handed over by Kazakhstan for transit through Russia, Russia will accept."