Russia backs TNK plan to reopen Lysychansk-Armavir pipeline
The Russian Energy Ministry has backed the initiative of Tyumenneft (TNK) and Transnefteprodukt to revive the oil
pipeline section between Lysychansk (in Ukraine) and Armavir (in Russia).
TNK needs this line to transport diesel fuel from its-owned Lysychansk oil refinery in Ukraine (Linos) to regions in Russia's south and Northern Caucasia. A feasibility study for this project should be in place by the end of this year. The section has a maximum carrying capacity of 1.5 mm tpy of petroleum products, but, once revived, it will be used to carry 800,000 tpy of diesel fuel, Transnefteprodukt announced.
TNK expects annual demand for diesel fuel in Russia's southern regions to reach 2.5 mm tons by 2005 and the company intends to meet a third of that demand. Preliminary estimates put the re-equipment cost of the pipeline at $ 18.8 mm (22.5 mm euros). An additional $ 8 mm (9.6 mm euros) will go to restart the necessary equipment at Linos. The project has an estimated recoupment period of eight years. A government official said that to raise funding for the project, TNK has been awarded an additional quota for the export of 200,000 tons of oil in the closing quarter of 2000 and the same amount in the first quarter of next year.