Russia to launch 2nd stage of ESPO pipeline by year-end

At the end of December, Russia is to launch the second stage of the ESPO (East Siberia - Pacific Ocean) oil pipeline. Experts say that this will speed up the formation of the ESPO oil brand which will be used as a new reference brand to reflect the situation on the Asian oil market.

The second branch of the pipeline will unite the oil fields of the Western and Eastern Siberia with the port of Kozmino in the Russian Far East. Since 2009, oil has been transported to Kozmino by rail and from there by sea to the markets of the countries of the Asia-Pacific region.

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With the launch of the second stage of the ESPO pipeline railway supplies will be replaced with pipeline supplies making it possible to increase oil export supplies to 50 million tonnes a year from 15 million tonnes. Currently, Russia supplies 15 million tonnes of oil a year to China via the Skovorodino-Mokhe pipeline. The total estimated capacity of Russia’s oil exports to the Asian pacific region is 80 million tonnes a year which is a challenging request for recognising the ESPO oil as a new reference brand along with Europe’s Brent, US’ WTI and Russia’s Urals, according to Vladimir Feigin, general director of the Institute of Energy and Finances.

“80 million tonnes is a very huge volume which Russia can distribute in different ways transporting it through the two branches of the pipeline,” Feigin said. “Russia has already been exporting a large volume of oil to the regional clients which prompted the formation of a new commercial oil brand - ESPO. The buyers noticed that this oil is better in quality than the Urals brand. It is cleaner, lighter and contains less sulphur. As the volume of oil exports continues to grow the chances for the emerging of a new world reference brand are also higher.”

The growing demand for oil in China and other Asian countries in the coming years will require new international markers to reflect the dynamics of the regional market and the growth of the demand for energy carriers. The ESPO oil which is produced in the Asian part of Russia and supplied to Russia’s partners in the Asia-Pacific region is claiming the right to be chosen as such a reference brand.

It is common knowledge that the centre of the global economy has been shifting to Asia, and Russia has the resources to meet the region’s growing demands for energy carriers including oil.

The shift of the global oil market to Asia will guarantee stability of supplies and protect the global market from drastic oil price leaps caused by global political and economic crises.

First published in the Voice of Russia.

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