Russian oil exports shift to Asia via new pipeline

[mooncliff]

$22bn (€15bn, £13.7bn) oil pipeline across east Siberia to China and the Pacific, allowing Russia to reorientate a large part of its oil trade, which is now focused on Europe, towards the east.
...
Transneft, the Russian oil pipeline monopoly, last month completed the first 2,757km (1,713 miles) stretch of the pipeline which runs from Taishet in Irkutsk region to Skovorodino near the Chinese border. At Skovorodino, oil is being loaded on to railcars for transport to Kozmino 2,100km further east. Cumbersome rail transport will be phased out after 2012, when Transneft completes the second section of the pipeline from Skovorodino to Kozmino.
...
Transneft said last week it would transport 300,000 barrels a day of oil through the east Siberian pipeline in 2010 and double that the following year, ending dependence on export pipelines to Europe. On completion, the pipeline will be capable of carrying up to 1.6m barrels of oil a day, about a third of Russia’s current oil exports.

http://www.ft.com/cms/s/0/61298f9c-f...44feab49a.html

[GRG55]

Re: Russian oil exports shift to Asia via new pipeline

$22bn (€15bn, £13.7bn) oil pipeline across east Siberia to China and the Pacific, allowing Russia to reorientate a large part of its oil trade, which is now focused on Europe, towards the east.
...
Transneft, the Russian oil pipeline monopoly, last month completed the first 2,757km (1,713 miles) stretch of the pipeline which runs from Taishet in Irkutsk region to Skovorodino near the Chinese border. At Skovorodino, oil is being loaded on to railcars for transport to Kozmino 2,100km further east. Cumbersome rail transport will be phased out after 2012, when Transneft completes the second section of the pipeline from Skovorodino to Kozmino.
...
Transneft said last week it would transport 300,000 barrels a day of oil through the east Siberian pipeline in 2010 and double that the following year, ending dependence on export pipelines to Europe. On completion, the pipeline will be capable of carrying up to 1.6m barrels of oil a day, about a third of Russia’s current oil exports.

http://www.ft.com/cms/s/0/61298f9c-f...44feab49a.html

I love the mainstream media spin about "shifting" oil exports...

Russia is a huge country. If one starts at the border with Europe and flies east across Russia, after crossing 5 time zones, there's only 6 more to go before hitting the Pacific. It makes no economic sense to build pipelines from the eastern Siberian oilfields to move oil overland to Western Europe.

The media are spinning this as though "European oil" is being sent the other way by the big, bad Russian bear...:p

[c1ue]

Re: Russian oil exports shift to Asia via new pipeline

I love the mainstream media spin about "shifting" oil exports...

Russia is a huge country. If one starts at the border with Europe and flies east across Russia, after crossing 5 time zones, there's only 6 more to go before hitting the Pacific. It makes no economic sense to build pipelines from the eastern Siberian oilfields to move oil overland to Western Europe.

The media are spinning this as though "European oil" is being sent the other way by the big, bad Russian bear...:p

Quite true, but also true that the new pipeline leaves less reason to use the oil depot and port in Latvia...

[ThePythonicCow]

Re: Russian oil exports shift to Asia via new pipeline

The media are spinning this as though "European oil" is being sent the other way by the big, bad Russian bear...:p

That's not how I read the reports I've seen. My reading is that Russia can now ship its Siberian oil, and later on gas, to far east customers (China, Korea, et al). This doesn't allow Russia to ship its western or Caspian sea petro east instead of to Europe; but it does give them another revenue source shipping its eastern or Siberian petro to the Far East. A country with two revenue sources can be more bold in its market moves than a country with only one source.

[BiscayneSunrise]

Re: Russian oil exports shift to Asia via new pipeline

. A country with two revenue sources can be more bold in its market moves than a country with only one source.

A country with two revenue sources can also be more wealthy but more importantly can be more influential in foreign affairs.

[GRG55]

Re: Russian oil exports shift to Asia via new pipeline

That's not how I read the reports I've seen. My reading is that Russia can now ship its Siberian oil, and later on gas, to far east customers (China, Korea, et al). This doesn't allow Russia to ship its western or Caspian sea petro east instead of to Europe; but it does give them another revenue source shipping its eastern or Siberian petro to the Far East. A country with two revenue sources can be more bold in its market moves than a country with only one source.

Oil is a fungible commodity with the largest, deepest and longest duration commodity markets in the world. You don't need to have multiple points of physical delivery to have multiple "sources of revenue" if you are an oil exporter. Just ask Saudi Arabia how many sources of revenue they have for the oil that passes through one export point...Ras Tanura. ;)

The articles are trying to put a spin on this pipeline completion that is inaccurate.

[ThePythonicCow]

Re: Russian oil exports shift to Asia via new pipeline

Oil is a fungible commodity with the largest, deepest and longest duration commodity markets in the world. You don't need to have multiple points of physical delivery to have multiple "sources of revenue" if you are an oil exporter. Just ask Saudi Arabia how many sources of revenue they have for the oil that passes through one export point...Ras Tanura. ;)

The articles are trying to put a spin on this pipeline completion that is inaccurate.

Hmm... ok.

How about this? With this far east port opening up, Russia now has more oil to sell. In addition to its southwest (Caspian Sea) oil, it now has its northeast (Siberia) oil. Yes, oil is fungible. But it is not elastic. If you have more oil to sell, it puts you in a more powerful position.

True, I can't defend that article's comments. But somehow my intuition is that this port has some non-zero impact on relations between Russia and Europe, to the favor of Russia.

P.S. -- Alternative ports and pipelines also help Russia keep from falling under the thumb of the U.S. military. Certainly it has done a better job of that than the Saudi's .

[Jay]

Re: Russian oil exports shift to Asia via new pipeline

Oil is a fungible commodity with the largest, deepest and longest duration commodity markets in the world. You don't need to have multiple points of physical delivery to have multiple "sources of revenue" if you are an oil exporter. Just ask Saudi Arabia how many sources of revenue they have for the oil that passes through one export point...Ras Tanura. ;)

The articles are trying to put a spin on this pipeline completion that is inaccurate.

So, it is more about the security in getting the resource to market, and, I would guess, the somewhat less important efficiencies gained by geography. Correct?

[GRG55]

Re: Russian oil exports shift to Asia via new pipeline

Hmm... ok.

How about this? With this far east port opening up, Russia now has more oil to sell. In addition to its southwest (Caspian Sea) oil, it now has its northeast (Siberia) oil. Yes, oil is fungible. But it is not elastic. If you have more oil to sell, it puts you in a more powerful position.

True, I can't defend that article's comments. But somehow my intuition is that this port has some non-zero impact on relations between Russia and Europe, to the favor of Russia.

P.S. -- Alternative ports and pipelines also help Russia keep from falling under the thumb of the U.S. military. Certainly it has done a better job of that than the Saudi's .

So, it is more about the security in getting the resource to market, and, I would guess, the somewhat less important efficiencies gained by geography. Correct?

Correct. Oil is the most political of commodities, but this is just a straight forward commercial decision. More oil production is being developed in a region that is geographically proximate [in a Russian context ] to these Asian markets.

But of course that doesn't make for very exciting headlines in the western press...hence the need to sell papers requires the bullhorn come up with some sort of geopolitical competition slant.

Don't get me wrong...Russia is an active player in the 21st century version of "The Great Game", but putting more oil into the Asian market doesn't hurt the USA, and could be argued to be "good" for other oil importers and, in a world where demand is currently flat, perhaps not so good for other oil exporters?

[flintlock]

Re: Russian oil exports shift to Asia via new pipeline

Russia is merely keeping its options open by building that pipeline. They can avoid the problem the Saudis have, where turmoil anywhere in the region threatens their ability to sell oil. it's a strategic move as well as an economic one.

[Shakespear]

Re: Russian oil exports shift to Asia via new pipeline

A good article in Asia Times on this topic

http://www.atimes.com/atimes/Central_Asia/LA08Ag01.html

Russia, China, Iran redraw energy map
By M K Bhadrakumar

The inauguration of the Dauletabad-Sarakhs-Khangiran pipeline on Wednesday connecting Iran's northern Caspian region with Turkmenistan's vast gas field may go unnoticed amid the Western media cacophony that it is "apocalypse now" for the Islamic regime in Tehran.

The event sends strong messages for regional security. Within the space of three weeks, Turkmenistan has committed its entire gas exports to China, Russia and Iran. It has no urgent need of the pipelines that the United States and the European Union have been advancing. Are we hearing the faint notes of a Russia-China-Iran symphony?