Lukoil, Russia's second largest oil producer, has cancelled expansion plans for its Baltic Sea oil product outlet of Vysotsk while it awaits the completion of a rail link and a diesel pipeline.
Lukoil president Vagit Alekperov says the planned expansion of Vysotsk's capacity to 15 million tonnes a year from 12 million tonnes forecast this year would not be possible before 2012.
The company will not consider enlarging the port's capacity until the railway monopoly RZhD completes its planned extension of the railway link, by which refined products are delivered to Vysotsk.
Lukoil has announced it may expand capacity at Vysotsk, from last year's 9.2 million tonnes of fuel oil, diesel and vacuum gasoil, to 17 million tonnes a year if the railway's capacity is sufficient to accommodate it.
Lukoil has decided against building a link to Vysotsk from the trunk diesel pipeline being built to Primorsk, a major Russian Baltic Sea port, by refined product pipeline operator Transnefteproduct (TNP).
In 2005, Lukoil and TNP agreed that the oil firm would build a link from Primorsk to Vysotsk to pump up to 2.5 million tonnes of diesel a year. 'At this point, given the volumes of diesel being shipped, building the link is economically inefficient,' Alekperov says.
TNP plans to complete the $1 billion (700,000 million) pipeline, which would export 8.5 million tonnes of diesel a year, by Q3 2007.