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. Last Updated: 07/27/2016

Pacific Pipe Faces Delay Over Supply

Work to extend an eastward oil pipeline to the Pacific coast may not begin until at least 2012 because of insufficient current oil reserves, a Natural Resources Ministry official said Tuesday.

The government has yet to decide when the work will begin, and the announcement was an indication of when that construction would take place.

The first leg of the pipeline -- designed to ship Siberian oil to Pacific markets -- is planned to arrive at a point near the Chinese border by the end of 2008 and will carry 30 million tons annually.

But the government could take a break of three to four years before extending the pipeline to the Pacific coast, said Sergei Fyodorov, director for geology and management of natural resources at the ministry. The extension will carry 80 million tons annually.

"Now that there's a lag in the growth of reserves, the implementation of the pipe's second stage ... may get delayed by three to four years," Fyodorov told reporters at a St. Petersburg news conference.

In Moscow, Deputy Natural Resources Minister Alexei Varlamov said oil companies and the government should sharply increase their exploration efforts in eastern Siberia.

Extractable oil reserves in the area stand at 557 million tons -- enough to produce only 25 million tons per year -- while the government had planned for reserves to reach 703 million tons by now, he said.

Natural Resources Minister Yury Trutnev on Tuesday gave his officials two weeks to review exploration work by oil companies that have prospecting licenses in the area, a ministry spokesman said. The ministry will revoke licenses if companies failed to carry out their exploration commitments, the spokesman said.

Sergei Grigoryev, vice president of state oil pipeline monopoly Transneft, said the government had set no definite date for the company to start building the second stretch of the pipeline. That will depend on the speed of oil-field exploration, he said, Interfax reported.