OREANDA-NEWS. December 17, 2012. The second line of East Siberia – Pacific Ocean pipeline system (ESPO-2) is to be commissioned in the second part of December 2012. The first line of ESPO (ESPO-1) was commissioned three years ago, in December 2009. For the moment, the route of ESPO-1/2 with oil dispatch from Koz’mino port is extremely popular with oil companies, because this route:

1) has an effective specific tariff at a minimal rate, that can be illustrated by the following table:

Oil pipeline

ESPO (1 and 2)

BPS-1

BPS-2

Tariff on the route, RUR per 1 ton

2081

553,5

543,92

Length of the route, km

4740

805

1000

Effective (specific) tariff, RUR per 100 ton-kilometer

43,9

68,8

54,39

2) is of the most export effectiveness (see further).

The peculiarity of ESPO route is the fact that the system accepts inly low-sulfur crude oil of ESPO type at this direction (in opposition to sulfurous crude oil of Urals type, which is accepted for export at the western direction through Ust’-Luga, Primorsk and Novorossijsk ports).

Realization of the principle of equal parity of oil deliveries at different export directions (which is specified in Clause 20.1 of RF Government Resolution No. 980 dated December 29, 2007), taking into consideration corrections on the quality of oil, is as follows:

Acceptance of oil

Pur-pe

Port of dispatch

Koz’mino

Ust’-Luga

Novorossijsk

Primorsk

Type of oil

ESPO

Urals

Urals

Urals

Cost of transportation, RUR/ton

2081

1952

1824

1719

Amount of price correction

-

24,0*USD /t

24,0*USD /t

24,0*USD /t

-

760 RUR/ton

760 RUR/ton

760 RUR/ton

Cost of transportation, with price correction, RUR/ton

2081

2712

2584

2479

Loss in price in comparison with delivery from Koz’mino, RUR/ton

Basic

631

503

398

* - as of November 20, 2012 (average amount since the beginning of the year – 42USD /ton).

So, it is evident that the economical effectiveness of ESPO route is affected first and foremost by higher price characteristics of ESPO oil type. The rate of loading of ESPO depends in its turn on readiness of oilmen to deliver oil of corresponding quality to the system. As the main advantage, producers get an opportunity to use a unified (and the cheapest one) means of transportation – pipeline, and not to depend on possible variations of cost for railway transportation at Skovorodino-Koz’mino section. Besides, oil companies can join different types of oil to the system that could not been exported before – for example oil from oil fields in Tomsk region.

Against this background, various publications appearing lately (for example a publication in “Neft’ i Kapital” magazine in November) seem absolutely unpersuasive, and conclusions on economical effectiveness of ESPO route and reasons of possible under-loading are made because of ignorance of elementary principles of tariff setting and pipeline logistics.