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. Last Updated: 07/27/2016

Primorsk Port Expansion Approved

The government said Wednesday it had approved a plan by state pipeline monopoly Transneft to expand the Baltic port of Primorsk to help ship the country's booming oil output to lucrative Western markets.

The government resolution said Transneft was now allowed to expand Primorsk to 600,000 barrels per day, or 42 million metric tons per year, and possibly to 1 million bpd in the future from the current level of 240,000 bpd, or 12 million tons a year.

Primorsk, near the city of St Petersburg, in 2001 became the first new oil export outlet for Russia since the collapse of the Soviet Union in 1991.

But as oil output in Russia booms for the fifth straight year, reaching 8.1 million bpd in February, oil export capacities are limited to just 3.5 million bpd.

Private majors say Transneft cannot cope with the rising volumes.

However, the government has said it would keep tight control over the pipeline network and is unlikely to allow oil majors to construct private links.

If Primorsk were expanded to 1 million bpd it would become Russia's biggest oil export port, surpassing the 900,000-bpd capacity of the Black Sea port of Novorossiisk.

Transneft has said it would need eight months to complete a feasibility study and another 18 months to expand Primorsk, a project to cost the monopoly some $1.3 billion.

The funds for the construction will be borrowed, Transneft vice president Sergei Grigoryev told Interfax on Wednesday.

He also said the tariffs for transporting crude oil through BPS will not change as a result of the work on the throughput capacity increase.

Additionally, the construction of eight oil reservoirs at Primorsk capable of storing up to 400,000 tons of crude oil is planned, he said. (Reuters, MT)