Export pipeline to need more volumes

Port of Ust-Luga began the long-awaited shipment of crude oil delivered to the terminal through the BTS-2 pipeline. Transneft company intends to use the new supply route to avoid the commodity transit through the territory of foreign states, as well as to redirect the cargo flow from the ports of Primorsk and Novorossiysk. Experts predict several affects effects of the project launch.

Redistribution

The first test shipment of export oil supplied to the Ust-Luga liquid bulk cargo terminal through the Baltic Pipeline System (BPS-2) was on March 23. The ceremony was attended by top officials of the country. The 100-ton oil cargo was loaded onto SCF’s tanker “Nevsky," which sailed to Rotterdam. Three days later the Ust-Luga port saw the second shipment of the cargo, loaded to the Montego tanker.

The BPS-2 projected capacity is 30 million tons of export oil a year. However, some experts believe the country may see a decline in production volume due to exhaustion of old oil deposits, so Russia will hardly be able to boost in short term the commodity exports through the network. Transneft predicted that oil production in Russia could rise by 5 million tons this year, but the figures seem not to be evident.
Therefore, the BTS-2 network will likely be fed for a while by the crude oil volumes redistributed from other areas. First, the Ust-Luga may get up to 6 million tons a year now shipped through the Poland’s port of Gdansk. Besides, 7 or 10 million tons of the crude volume currently handled at the busy port of Primorsk (BPS-1) could be exported annually via the Ust-Luga facility. Finally, exported oil at amount of 3-5 million tons will be shifted from Novorossiysk, as the commodity shipments through this port are complicated during winter season. The company also noted that in accordance with market conditions, the export of crude oil is more appropriate through the North-West region, while the Southern region would be a lot more convenient for oil product shipments. Overall, all these efforts could provide 16-20 million tons of oil, that is, only half of the BPS-2 projected capacity.

Vitaly Chernov