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. Last Updated: 07/27/2016

$4.7 Billion Deal Signed for Primorsk Oil Port

Russian officials signed off on a $4.7 billion deal Friday to construct a port and crude oil terminal in Primorsk on the Gulf of Finland and a pipeline leading to it.

Valery Serdyukov, acting governor of the Leningrad region, and Dmitry Savelyev, president of national pipeline monopoly Transneft, agreed at the signing ceremony to kick off construction in June, with Transneft managing the project and the region providing and registering the land.

The Primorsk port will be a major part of Russia's planned Baltic Pipeline System, a network that would alleviate the nation's need to send its crude through the Baltic states.

Major international oil and gas companies, including KomiTEK, Rosneft and Slavneft of Russia, Neste of Finland, Total of France, British Gas and the U.S. firms Conoco and Williams, are holding talks with Transneft on participating in the project.

Once completed, the port will be able to export up to 45 million metric tons of crude oil, petroleum products, liquefied gas and dry cargo a year. It will occupy an area of 1,500 square meters.

At the first stage, with an estimated price tag of $500 million, the port will export about 12 million tons of oil a year. The facilities will be expanded to handle 30 million tons at the second stage.

"The project will be implemented as cash, backed by the guarantees of oil deliveries, is attracted from international financing organizations," Transneft said in a statement.