Source: Interfax Information Services, B.V.
Date of Publication: December 28, 2004

MOSCOW. Dec 27 (Interfax) - The Russian government has approved measures to increase the throughput capacity of the Baltic pipeline system to 60 million tonnes a year.

Russian Prime Minister Mikhail Fradkov signed corresponding orders on December 23, the government press service reports.

The proposal of the Industry and Energy Ministry and Transneft company to design and build the third section of the system to boost the throughput capacity to 60 million tonnes was accepted on condition of its approval by the environmental authorities.

The construction will be funded with loans. The government found it expedient that Transneft take loans to finance the project. The Federal Tariff Service is advised "to take into account the funds required to service and repay loans taken to finance the construction when it regulates oil transportation tariffs for Transneft," the orders say.

To guarantee non-stop safe shipping in the Gulf of Finland the government bound the Transportation Ministry together with the Economic Development and Trade Ministry to include sums for the construction of two diesel ice-breakers in the draft a federal investment program for 2005-2007 with an eye on commissioning them in 2007.

Fradkov bound the State Construction Committee and Rostekhnadzor technical oversight authority to conduct environmental and other studies related to the project required by law.

The government advised the authorities in Leningrad, Novgorod, Tver and Yaroslavl regions to help resolve technical issues and assign land for the construction of pipeline facilities.

The first part of the system transporting oil from Timano-Pechora and West Siberian oil and as provinces and also from Kazakhstan with a capacity of 12 million tonnes was commissioned on December 27, 2001. In 2003 Transneft boosted the system capacity to 30 million tonnes. Presently the system has a capacity of 50 million tonnes and in the future it was supposed to be raised to 62 million.

However, recently Transneft asked permission from the government to reduce the planned capacity to 60 million tonnes to significantly cut down on costs. According to Transneft estimates, raising capacity to 62 million tonnes would require over $1.4 billion in investments and to 60 million only $500 million.

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