Russia to increase oil transportation tariffs to finance BPS

Jul 14, 2000 02:00 AM

The Russian Federal Energy Commission has been ordered to increase oil transportation tariffs to finance the construction of the Baltic Pipeline System (BPS), Vice President of Transneft Sergei Grigoryev said. Prime Minister Mikhail Kasyanov signed a ruling outlining the BPS financial scheme.
"Oil transportation tariffs are expected to be hiked by about 12 %," Grigoryev told. He said the energy commission, which regulates the natural monopolies' tariffs, should set new oil transportation fees.
BPS involves the construction of an oil pipeline linking the West Siberian and North Russian Timan Pechora oil fields with a yet-to-be-built Baltic port at the domestic town of Primorsk. "According to the ruling, Transneft is also expected to borrow up to several tens of million dollars for the construction of BPS from banks," Grigoryev said, adding the lenders would be defined later this year. He also reiterated the government had empowered Transneft to be the only BPS operator. "This means that Transneft will build the pipeline and the port without attracting oil companies as it was originally planned," he said.
BPS' entire costs stand at $ 460 mm and it is expected to be launched in 19 months. In the first stage, the annual throughput of BPS pipeline would total 12 mm tons, with a further increase to 30 mm tons in the future.

Source: Bridge News via Newspage
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