Install

Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

Pipeline Hinges on July Report

The government will be able to decide on an oil pipeline to the Far East once a feasibility study is completed in July, Industry and Energy Minister Viktor Khristenko said Thursday.

"The completion of a feasibility study is not a decision itself, but it will provide the basis for making the decision," Khristenko told reporters after meeting with U.S. Energy Secretary Spencer Abraham.

Earlier Thursday, Abraham and Alexander Rumyantsev, director of the Federal Nuclear Power Agency, signed an agreement on retrieving and reprocessing nuclear fuel.

The United States -- along with other potential consumers of Russian oil such as Japan and China -- has expressed keen interest in Russia expanding its oil production and export capacity.

While domestic oil majors have been steadily ramping up output, Russian export capacity is now almost at its maximum.

Khristenko said that nearly 100 percent of the oil transportation pipeline system operated by state-owned Transneft is already in use. That means no significant hikes in export volumes can be expected until more pipelines are built.

President Vladimir Putin urged the government to speed up pipeline decisions in his annual address Wednesday.

A route to the Far East could add another 80 million tons per year to Russian exports. China and Japan are vying for one of two possible routes.

The government is also studying an export route to link West Siberian oil fields with the Arctic shores of European Russia. Such a route is particularly favored by the United States as an alternative to the Middle East.

The project -- which initially envisioned Murmansk as a terminus -- is still in the works and could end up having another terminal port, Khristenko said.

Another option to boost export capacity would be to increase the throughput of the Caspian Pipeline system, the only major privately operated major pipeline on Russia's territory, Khristenko said.

While the Caspian Pipeline Consortium currently transports some 15 million tons of oil per year, he said, it could be expanded to carry up to 67 million tons. Russian companies, as well as the government, have stakes in CPC.

The infusion of Russian crude is particularly welcome on the world market as a way of bringing down record-high oil prices.

Abraham said he was optimistic that producer nations would ease the situation on the world markets.

Saudi Arabia has already promised to hike output to 9.1 million barrels per day and said it is ready to add another 1.4 bpd if needed.

Abraham said the Saudi pledge was "very significant," The Associated Press reported.