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Transneft to finance Zapolyarye-Purpe oil pipeline construction

November 24, 2011, 15:51 UTC+3

.Financing of the design and construction of the Zapolyarye-Purpe pipeline shall be made with funds envisaged by the Transneft investment program

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MOSCOW, November 24 (Itar-Tass) — Transneft will finance the construction of the Zapolyarye-Purpe oil pipeline. This decision has been made by the Russian government. The corresponding order was signed by RF Prime Minister Vladimir Putin and posted on the government’s website.

“Financing of the design and construction of the Zapolyarye-Purpe pipeline shall be made with funds envisaged by the Transneft investment program,” the document says. In addition, Transneft or its subsidiaries will act as the customer and operator of the construction. It was planned initially that 50 percent of funding for the project would be provided by Transneft, TNK-BP, Gazprom Neft and Lukoil.

As for the timeframe, according to the published document, the first stage (the pipeline section from the Tarko-Sale village to Purpe) is to be designed and built in the fourth quarter of 2014. The second section (from the Novozapolyarny settlement to Tarko-Sale) is to be complete in the fourth quarter of 2015. Finally, the third stage of the pipeline running from the pumping station in the Taz district of the Yamalo-Nenets Area to Novozapolyarny is to be completed in the fourth quarter of 2016.

It had been planned earlier that the first stage would be completed in December 2013, second stage - in December 2014 and third stage - in December 2015.

At the same time the RF government instructed the Federal Tariff Service to take into account the funds needed for the construction of this pipeline, servicing and repayment of borrowed money in the calculation of tariffs on the pumping of oil through the Transneft system.

Gazprom Neft wants to take part in tenders for the development of deposits such as Imilorskoe, Erginskoe and Gavrikovskoe, but it is not ready to pay any price for licenses for the development of such complicated fields. Gazprom Neft Deputy Director General Boris Zilbermints earlier expressed hope that the Zapolyarye-Purpe pipeline would be put into operation in 2015, despite differences between oil companies and the pipeline monopoly Transneft on the arrangements for project financing. “Transneft is ready to finance the pipeline by itself, and it needs guarantees of oil supply to the pipeline. The negotiations are at an advanced and constructive stage. By the time the pipeline launches at the end of 2015, we will be able to supply 2-3 million tonnes of oil equivalent a year, and then we will start increasing these volumes,” he said.

The section Zapolyarye-Purpe is a part of the oil pipeline system Zapolyarye (Yamalo-Nenets Autonomous Okrug) – Purpe (Yamalo-Nenets Autononous Okrug) – Samotlor (Khanty-Mansi Autonomous Okrug). The construction of this system is being realized in two stages.

The Oil Transporting Joint Stock Company Transneft was established according to the Decree No 1403 of the President of The Russian Federation dated 17 November 1992 and by the Decision No 810 of the Government of Russian Federation dated 14 August 1993, according to the company website. Transneft (RTS:TRNF, MICEX: TRNFP) is a Russian state-owned business responsible for the national oil pipelines. It was founded in 1993 and owns the largest oil pipeline system in the world, with a total network length of almost 50,000 kilometres (31,000 mi). Transneft transports about 93 percent of the oil produced in Russia. The company is headquartered in Moscow and led by Nikolai Tokarev.

Transneft is the legal successor to the USSR Ministry of Oil Industry Main Production Department for Oil Transportation and Supplies (Glavtransneft), with 100 percent of shares belonging to the state. On 16 April 2007, pursuant to a presidential decree signed by President Putin, Transnefteproduct – an organisation concerned with the transportation of refined oil products, was merged into Transneft.

The main branches of the company’s activity are the following: rendering the service of oil and oil products transportation via the system of trunk pipelines inside and outside Russian Federation; the execution of the preventive, diagnostic and fallback recovery works on trunk pipelines; coordination of the activity aimed to develop the network of trunk pipelines and other objects of pipeline transport; cooperation with pipeline companies of other countries, regarding the problem of transportation of the oil and the oil products according to intergovernmental agreements; participation in solving the problems of scientific, technological and innovation development in pipeline transport, as well as introduction of new equipment, technologies and materials; finding the investments for developing the production basis, amplification and reconstruction of the facilities of Transneft organisations; organisation of works aimed to preserve the environment in the areas, close to the objects of the pipeline transport.

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