Interview with Nikolay Tokarev

Construction costs for the multi-billion dollar East Siberia – Pacific Ocean pipeline are to rise again, according to the president of Transneft. Nikolay Tokarev blamed the rising costs of materials for the increase.

The pipeline is planned to run from Siberia to Russia's Far East and on to China and the Asia-Pacific Region.  

In an interview with RT he revealed more about the future of the project, and began by outlining its current state of progress.

Nikolay Tokarev: It has been under construction for two years, the first stage is 70% complete and will be finished by December 2009.  It's an important project that enables Russia to diversify export routes with the eastward branch, together with the development of new oil fields.

RT: What volume do you expect to transfer to the pipeline?

NT: The volume should reach 80 million tonnes of which 50 will go to Kazmino, 15 to China and 15 will go to refineries across Russia's regions. By 2012 we expect an increase of oil production in Russia of 60 million tons, with one part processed in Russia and another part exported to the east.

RT: Do you expect the costs of the project to grow due to the high price of steel and other factors?

NT: Primarily it is due to metal prices. We managed to buy all the supply we needed for the first stage of construction before the wild jump in prices. Metal prices will influence the second stage, pipe prices will increase by 100% by the end of the year and we'll have to alter our budget for the second stage of construction. In the first stage we expect financial factors to influence costs. Our credit contract with Sberbank means our credit costs can rise. We expect this. The growth will not be linear. It will be 1.5 to 2% on some of the money we have borrowed.