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Russia targets Asia with expanded ESPO pipeline, competes with Saudi Arabia

Russia brought the East Siberia Pacific Ocean pipeline to full planned capacity Wednesday, enabling the country to increase market share in Asia and compete with its OPEC+ partner Saudi Arabia.

Russian energy minister Alexander Novak and pipeline operator Transneft CEO Nikolai Tokarev launched the ESPO expansion Wednesday.

ESPO 1, which runs from Taishet to Skovorodino, now has a capacity of 80 million mt/year, equivalent to around 1.6 million b/d. ESPO 2, which runs from Skovorodino to the port of Kozmino, now has a capacity of 50 million mt/year, around 1 million b/d.

The launch will help diversify Russian export markets and increase supplies to lucrative Asian markets. Major infrastructure projects such as ESPO are enabling Russia to capitalize on its vast oil and gas resources and strategic location to lift market share in Asia, particularly China. Asia is also a key market for Russia’s OPEC+ partner, Saudi Arabia.

“It’s a question of Russia’s energy security,” Novak said at the launch. “This infrastructure allows us to diversify deliveries of Russian energy resources to new markets of the Asian-Pacific region. Experts forecast the region to develop at a greater pace than other regions, so it’s important for us to develop infrastructure in this direction.”

However, Novak does not expect the ESPO expansion to cause conflict with OPEC+ partners.

“Regarding our relationship with OPEC and non-OPEC, we analyze overall production and not export directions,” he said. “Development of east and west infrastructure is in accordance with our oil industry development program… In west Siberia output has been declining for the past several years, while new regions are being developed such as east and north Siberia, where production is on the rise. So overall, the balance is maintained.”
Source: Platts

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