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Viktor Khristenko signed off on building the Eastern Oil Pipeline
Industry and Energy Minister Viktor Khristenko signed off on building the Eastern Oil Pipeline, a route with the capacity to transport 30 million metric tons of oil per year. The pipeline is intended to pump oil from deposits in Western Siberia and will extend nearly to China. However, government officials did not mention if Russian oil would also be delivered to Japan, Gazeta.Ru reported. According to reports Wednesday, Khristenko signed a decree defining the stages for the construction of the pipeline from Taishet in the Irkutsk region to Skovorodino in the Amur region, just 60 km from the Russian-Chinese border. Transneft will build the first section until mid-2008. After that, the pipeline will be extended to Perevoznaya Bay in the Primorye Territory. Aton Brokerage's Zarko Stefanovski says that the project's initially stated price of $16 billion is unjustifiably high. Analysts from Antanta Kapital believe that the new guideline of $11.5 billion, also being used by officials at the Industry and Energy Ministry, is a sort of a compromised version. "However, it is necessary to take into account the fact that the estimates of expenses are frequently exceeded in the process of construction, he said." Experts estimate the construction of the first section will require about a half of the $11.5 billion sum. Transneft has sent the government a list of customs and tax privileges, with which the company is seeking to cut the investment recoupment period. The company's press service said that "the issue of privileges has not been resolved yet." The first section of the pipeline will pump oil from the deposits in western Siberia. The pipeline could be used for oil exports, but it would be necessary either to extend the pipeline to China or to further deliver crude via railroad. The government is so far reticent about the fate of the pipeline's second leg, which is expected to reach the Pacific Ocean and make deliveries to Japan and South Korea profitable. Analysts doubt that the pipeline will be extended to Perevoznaya Bay. The fall of oil prices may make oil deliveries via this pipeline unprofitable while oil in Eastern Siberia, expected to be transported via the pipeline, still has to be further explored, Meaning, Japan may never receive Russian oil.
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