Russian oil companies sign agreement to develop pipeline to Arctic port

by The Associated Press

Four major Russian oil companies signed a memorandum of understanding Nov. 27 to build a pipeline system to the Arctic port of Murmansk, a project intended to boost oil supplies to the United States and Western Europe.

The cost of the project is estimated at $3.4 billion to $4.5 billion, and should be completed by 2007, according to a joint statement by Lukoil, Sibneft, Tyumen Oil and Yukos. The companies are considering two routes leading from Western Siberia to the Barents Sea port of Murmansk, 1,450 miles north of Moscow.

The network is to carry 584 million barrels of oil annually from Murmansk to Western Europe and the United States, the companies said. It would provide the shortest sea route for Russian oil to those markets, the Interfax news agency reported.

American politicians and oil executives see Russia as a strategic source of petroleum that will help reduce U.S. energy dependence on the turbulent Middle East.

A major constraint on exports to the United States has been Russia’s lack of a port large enough to handle big oil tankers, which would make such shipments more commercially attractive. Russia’s obsolete pipeline network, operated by the state monopoly Transneft, also has slowed growth.