Taxpayers May Finance Baltic Pipeline II

01.07.2008 (13:17) | Kommersant

Transneft head Nikolay Tokarev is proposing that the construction of the second line of the Baltic Pipeline System be paid for from the federal budget.

The company (in which 88 percent of the shares, and 100 percent of the voting shares, belong to the state) is asking the Finance Ministry for 118-120 billion rubles to be paid into its authorized capital. The Ministry of Energy says that state financing for the pipeline is not currently under consideration.

All previous Transneft projects, including the East Siberia pipeline and the first line of the Baltic Pipeline, were financed by Transneft through changes in the fee for the transportation of oil. Zarubezhneft and Surgutneftegaz are the most interested in the construction of the pipeline. Gunvor, the trader for Surgutneftegaz, is building a terminal at the Port of Ust-Luga.

Surgutneftegaz plans to increase the capacity of its Kirishsky oil refinery and pump up to 12 million tons per year through the second Baltic line. Zarubezhneft is building a terminal there with a capacity of 10 million tons per year, with the possibility of increasing that capacity to 18 million tons.

On June 18, a draft government resolution on the construction of the pipeline was submitted to the Energy Ministry. It proposes a construction date of September 2008 to the end of 2011. Now the government will discuss the route of the pipeline and sources of its financing. Tokarev said that another financing option under consideration involves Vneshekonombank, either as a direct lender or as the organizer of a syndicated loan. The pipeline will stretch from Unecha, Bryansk Region, to Leningrad Region. Its construction was proposed after Russia and Belarus came into conflict over oil transit fees on the Druzhba (Friendship) pipeline last year.

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