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No. 4, 2012

Vladimir Igorev

STEEL ARTERY TO VARANDEY


LUKOIL brings into operation the new Kharyaga-Yuzhnoye Khylchuyu oil pipeline

In the fall of 2012, the Kharyaga-Yuzhnoye Khylchuyu oil pipeline, construction of which was launched in 2010, began operating with an annual capacity of 4 million tons. The pipeline is to play an important role in improving the oil logistics of the Company's Timan-Pechora oil fields. The oil arriving from the Kharyaginskoye field to the Varandey sea terminal is expected to increase its export volumes to 5.8 million tons per year.

The pipeline linking the field with the tank farm of the Varandey export terminal is about 158 km long, following the economically optimal route. The crude oil, under a pressure of 63 atm and at a temperature of 70°C, will be transported to the tie-in point along the existing Yuzhnoye Khylchuyu-Varandey pipeline.

Environmental safety was the focus of attention during construction. For instance, no channels were dug for crossing spawning rivers: the pipeline crosses water bodies by bridge or on braces. In order not to disturb the permafrost layer, a system for thermostabilization of the soil was envisaged. The oil pipeline is fitted with a multistage leak detection system. Checks will be made that the pipeline is in working order in summer by helicopter and in winter by snowmobile.

Construction of the facility will help resolve a whole series of major problems. First, to transport oil from the LUKOIL-Komi Inzyrey and Kharyaga fields directly to the Varandey terminal for loading onto tankers for export.  Second, the Kharyaga-Yuzhnoye Khyl-chuyu pipeline will make it possible to use the sea route for exporting the oil, thus cutting the Company's costs of transporting oil via the Baltic Pipeline System (BPS).

The fact is that it is cheaper to transport oil through Varandey to Rotterdam than along the Baltic Pipeline System via Primorsk. Moreover, traders estimate that delivery of 4 million tons of oil (this being the throughput capacity of the Kharyaga-Yuzhnoye Khylchuyu pipeline) via the Transneft pipeline system cost LUKOIL approximately 4 billion rubles a year, whereas it cost roughly 5.5 billion rubles to build LUKOIL's new northern pipeline (not including erection of auxiliary facilities). This pipeline project is thus expected to pay for itself relatively quickly.

Startup of the new "steel artery" will also help lift part of the load from the Kharyaga-Usa and Ukhta-Yaroslavl interfield oil pipelines, which have been operating at full capacity.

Finally, the operation of the new pipeline will help reduce the payback period of the Varandey terminal itself, thanks to the substantial load increase.

Let us recall that the Varandey export terminal, located beyond the Arctic Circle in the northern part of the Timan-Pechora oil- and gas-bearing province, has been set up in the Barents Sea, 22 km from the shore. The sea is 17 m deep here and the structure of the jetty itself, weighing 11,000 tons, rises to a height of over 50 m. It accommodates living quarters, a mooring and cargo-handling facility with a loading arm and helipad. Two strings of the pipeline stretch from the shore, bringing an annual 12 million tons of oil for loading onto tankers.

LUKOIL's Varandey fixed offshore ice-resistant export terminal has been recorded in the Guinness Book of Records as the northernmost year-round operating oil terminal in the world located at 69°03'11" North.




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Oil of Russia, No. 4, 2012
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