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Monday, December 18, 2017

Export capacity unlikely to curb short-term Russian growth

The International Energy Agency (IEA)  reports that limits to export capacity growth may prove less of a check on Russian crude oil production in the next three to four years than earlier seemed likely. The list of pipeline and export terminal expansions planned up to 2008 is considerable. If all are completed, and barring political, fiscal and financial uncertainties, export capacity could rise by 0.5 mbd per year during 2004-2008.
The IEA estimates that Russia’s export capacity grew by 0.6 mbd in 2003 and could increase by a further 0.75 mbd both in 2004 and 2005. Annual expansion could slow to average just over 0.4 mbd over 2006-2008.

Key developments augmenting oil exports 2003-2005 include:

·         the ongoing expansion of the Baltic Pipeline System to Primorsk, rising from 0.6 mbd capacity in late-2003, to a current 0.84 mbd and attaining 1 mbd well before end 2004;
· de-bottlenecking of the Novorossiysk export facilities, which should add 0.06 mbd in the second half of 2004 and a further 0.05-0.06 mbd in 2005;
· an effective de-bottlenecking of 0.1 mbd at Tuapse on the Black Sea through de-segregation of Urals and Siberian Light flows;
· expansion of rail-fed facilities operated by Lukoil at Vysotsk, Kaliningrad and Varandey, which will add at least 0.05 mbd in 2004 and a further 0.065 mbd in 2005;
· further incremental rail exports of up to 0.1 mbd in 2004, including higher supply to China;
· 0.1 mbd of new capacity on the northern leg of the Druzhba pipeline system feeding Plock;
· the potential reversal of the Adria to Druzhba pipeline, contributing 0.1 mbd by 2005.