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. Last Updated: 07/27/2016

Top 5 Oil Firms Move Step Closer to America

Murmansk Pipeline
Yukos1 million35.71
*barrels per day
** percentage
Source: the companies

The nation's top oil firms said Wednesday that they had moved a step closer to building a multibillion dollar export terminal in Murmansk to boost exports to Europe and the United States.

LUKoil, Yukos, Tyumen Oil Co. (TNK), Surgutneftegaz and Sibneft plan to raise by 25 percent the capacity of a planned pipeline to Russia's only ice-free Arctic port.

The companies signed a memorandum on financing the feasibility study for a 3 million barrel per day pipeline from western Siberia to Murmansk and said they were ready to guarantee the required crude oil supplies.

The memorandum also said that after the feasibility study was completed before the end of 2004, the five firms would ask state pipeline monopoly Transneft to build the giant link.

The companies had planned a 2.4 million bpd pipeline. The $4.5 billion project would make it profitable to ship oil to the United States by using larger tankers.

Transneft head Semyon Vainshtok, who has long opposed the project, said in a letter to the Energy Ministry that he now supports the idea.

Energy Minister Igor Yusufov sent a separate letter to Prime Minister Mikhail Kasyanov asking for plan to be approved.

The companies agreed in June to boost capacity because Sibneft and TNK raised their requests for future shipment volumes, a LUKoil spokesman said.

Yukos in April agreed to take over Sibneft. TNK's owners have agreed to merge the company with British supermajor BP's Russian assets.

Transneft will supervise the new pipeline's construction if a decision to build it is made, Yusufov wrote.

The move comes as Russia, the world's No. 2 oil exporter, seeks new markets outside Europe as its oil output is booming for the fifth-straight year.

Russia has said the new project could help the United States cut its dependence on the turbulent Middle East oil supplies.

The five companies together account for about three-quarters of Russia's 8.3 million bpd output.

The 3 million bpd pipeline would stretch 2,500 to 3,600 kilometers from the country's existing pipeline network to the deep-water port of Murmansk, which would be able to load very large tankers for trans-Atlantic oil shipments.

The firms have said the project could be completed by 2007.

Under the memorandum, Yukos would guarantee supplies of 1 million bpd, LUKoil 660,000 bpd, TNK 500,000 bpd, Sibneft 400,000 bpd and Surgut 240,000 bpd.

The same proportions will be used to finance the feasibility study, which is due to cost a few dozen million dollars.

(Bloomberg, Reuters, MT)