Updated at 23:19,25-10-2016

Kremlin to play safe: Russia to deliver oil bypassing Belarus

27-05-2009, 17:34

"Transneft" has named June 10 as the date when construction of BTS-2 (the Baltic Pipeline System-2) is to start. This pipeline link is to enable Russia to export oil bypassing Belarus.

As Gazeta.ru notes, it will give Russia an opportunity to decrease transit risks. However, there could be not enough oil for the new pipeline and the Eastern Siberia Pacific Ocean oil pipeline (ESPO) which is being constructed now, and that could cause a conflict between Russian oil-industry workers.

The construction of the second trunk line of the system (BTS-2) is to start on June 10. On this day the first welding on the pipeline will take place near Bryansk. As the head of Transneft company Nikolay Tokarev stated, the event will be organized and held "in a solemn way, which is appropriate to the meaning of the project".

The Baltic Pipeline System-2 (BPS-2) is to be 1016 km. It will run from the town of Unecha (Bryansk region) to the Ust-Luga terminal (Leningrad region). Oil will be transported from its port in oil-carrying ships to Europe. Besides, a branch would be constructed to the oil refinery in Kirishy. The he throughput capacity of BPS-2 will be 50 to 75 million tons of oil annually.

The projects cost is about 4 billion dollars. Its construction is to be finished by the end of 2012.

The BPS-2 is intended primarily for cushioning of transit risks of Russia in oil deliveries through Ukraine and especially Belarus.

"In January 2007 Alyaksandr Lukashenka blocked Russian transit via the territory of its country,"
reminds the head of the analytical department of the "Gallion Capital" foreign company Alexandr Razuvaeuv. "Such things cannot be tolerated, and construction of the BTS-2 would decrease risks considerably".

The BPS-2 in its full capacity would transport most of oil delivered through the Druzhba pipeline (about 70 mln tons of oil are delivered through it via Ukraine and Belarus to Europe). It goes without saying that our closest neighbours are not happy with that, as their positions as transit countries would become much weaker, and they would lose one of the levers of pressure on Russia.

Last year Belarusian authorities, concerned by BTS-2 plan, even offered Transneft to take part in privatization of Belarusian oil pipelines, but this initiative hasnt had any outcome. Partially it is explained by the fact that Belarusian pipelines are worn-down, and their modernization demands serious investments.

However, the same could be said about the Druzhba pipeline, so from this point of view the BTS-2 is very convenient for Russia too. Instead of reconstruction of its old pipeline which goes through unpredictable transit states, a new pipeline to be fully controlled by Transneft would be constructed.

However, confusing situation may occur. The BTS-2 pipeline may become a competitor of the ESPO Eastern Siberia Pacific Ocean oil pipeline. "We have common oil," said the senior expert of the Policy environment centre Dmitry Abzalov. "If there wont be enough oil from Eastern Siberian oil fields, which are being developing rather slowly, to fill the ESPO pipeline, oil from the Western Siberia would be used, which initially was intended for deliveries through the BTS-2".

The ESPO is considered to be a priority project, as it allows Russia to reach Asian and Central Asian markets, and which is even more important, of China. It was China that granted a credit for the ESPO construction and siphoning oil into it: Rosneft received 15 billion dollars, and 10 billion went to Trasneft.

There may be not enough oil for the both pipelines in the next few eyars, and it could cause a conflict between oil companies: Rosneft on the one side and Surgutneftegaz and Gunvor company on the other.

The problem is that Gunvor is controlled by businessman Gennady Timchenko, who is considered to be close to Russian Prime Minister Vladimir Putin. It was Timchenko who lobbyied the BTS-2 project most actively, as his company sells oil via ports of Northern West. However, as believed by Dmitry Abzalov, there wont be a serious war of the Kremlin groups. "A kind of a strife can occur, but it is most likely to de solved at the level of Transneft," the political analyst says. "So the struggle for receiving the grace of the companys head Nikolay Tokarev is likely to take place".