Bloomberg News

Russian Rail to Spend $1.1 Bln to Improve East Siberia Link

April 04, 2005

OAO Russian Railways, the country's rail monopoly, plans to invest up to 30 billion rubles ($1.1 billion) on railways in East Siberia to help increase the amount of oil shipments from the region to Asian countries.

Russian Rail by 2008 plans to ship as much as 30 million tons a year (600,000 barrels a day) of oil from Skovorodino near the Chinese border to Perevoznaya, Russia, on the Pacific coast, the Moscow-based company said in a statement posted on its Web site today. The fuel could then be put on tankers destined for Asian countries such as China or Japan.

Russian oil companies are increasing shipments by rail because the nation's pipeline capacity hasn't kept up with crude production that's increased 50 percent since 1999. Buyers of oil in Asia want access to more Russian crude to reduce their dependence on the Middle East for supplies.

Chinese oil companies have signed contracts guaranteeing that they will increase rail deliveries of Russian oil from last year by half to as much as 15 million tons a year, the company statement said.

OAO Transneft, Russia's pipeline monopoly, plans to build the first stretch of its eastern pipe from the Irkutsk region to Skovorodino, about 60 kilometers (37 miles) from the Chinese border. The pipeline will initially ship 600,000 barrels of oil a day.

Western Siberia

The first stretch will be further upgraded to ship 1.6 million barrels of oil a day, including 1 million barrels via an extension to a Pacific oil port.

Russian Railways will improve its network to boost oil transport by rail from western Siberia to the east by as much as 57 percent by 2007, the company said on March 16.

Russian Railways's construction plan will allow as much as 36 million tons a year of oil to be shipped from western Siberia, Russia's main oil-producing region, to Russia's East and China, up from 23 million tons a year now.

About three-fourths of Russian Railways's oil shipments to the east are delivered to Russia's domestic market, to refineries such as OAO Yukos Oil Co.'s Angarsk plant near Lake Baikal, the world's largest freshwater lake.

To contact the reporter on this story: Michael Teagarden in Moscow at

To contact the editor responsible for this story: Tim Coulter at

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