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Russian pipeline operator Transneft fined by regulator

Russia's industrial safety regulator will fine pipeline monopoly Transneft after finding 15 violations in the company's East Siberian oil pipeline project, a Rostekhnadzor spokesman said.

Among other violations, the regulator cited a lack of electrochemical corrosion protection on sections of the East Siberia-Pacific Ocean (ESPO) pipeline, old sections that were in need of replacement, poor maintenance, and non-disposed waste on parts of the route. “Fifteen violations have been found, and a resolution has been made to impose an administrative fine,” the regulator said. Transneft CEO Semyon Vainshtok said earlier that 950 km (600 miles) of the pipeline had already been built, and that the entire project was due for completion by late 2008.

The ESPO pipeline, with design capacity of 80 million metric tons (588 million bbl) of crude annually, is set to transit Siberian oil to the Asia-Pacific market. The pipeline will cover over 4,700 km, and is being built in two stages. In the first stage of the project, a 2,757 km sector will be built with capacity of 30 million tons (220.5 million bbl) of oil per year. The first leg of the ESPO project is estimated at $11 billion and should be concluded by late 2008. It will link Taishet, in East Siberia's Irkutsk Region, to Skovorodino, in the Amur Region, in Russia's Far East. The second leg will stretch for 2,100 km from Skovorodino to the Pacific. It will pump 367.5 million barrels of oil annually, which could be increased to 588 million barrels in the Taishet-Skovorodino section.

The initial project plans had to be revised, as the pipeline's first stage was rerouted due to environmental concerns over its proximity to Lake Baikal. The route was shifted to about 400 kilometers (250 miles) away from the lake, the world's largest freshwater body, and divided into three segments following a public protests and a presidential order. No exact timeframes for the project's implementation have yet been fixed. A controlling stake (75%) in Transneft is owned by the government, and corresponds to 100% of voting shares. (