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3 Mar, 2008 11:50

New port planned for Russia’s Far East

A new port is planned near the city of Nakhodka to serve as a terminus for a new multi-billion-dollar pipeline for Russian oil transported to Asia. It's not only the money that this project brings to the region.

It was discovered in the 19th century by the crew of a ship called 'America.' Then it became a Finnish settlement, a tiny fishing village.

But all that changed in 1950, when nearby Vladivostok was chosen as the base for the Soviet Pacific Fleet. As Russia’s primary deep-water port in the Far East, the area was transformed.

The city is now known as Nakhodka and boasts four major international ports.

Another is planned to serve as a terminus for a new multi-billion dollar pipeline for Russian oil transported to Asia.

The South Stream project and the recent crisis over Ukraine's unpaid gas bills have put the spotlight on Europe’s reliance on Russia's energy resources.

But thousands of miles away, in Russia’s Far East there is an energy project in the offing for consumers in a different part of the world.

A new multi-billion dollar pipeline is being planned and its terminus is a new port to be built just a few kilometres up the coastline from Nakhodka. Right now Kozmino Bay serves as a hot spot for local ice fishermen, but this is where the port will be built to serve as the end point for the massive East European Pacific Ocean pipeline.

Once completed, the pipeline, stretching over some 4,000 kilometres of land, will carry 300,000 tons of oil per day to a place where it will be loaded onto ships to make its way across the Sea of Japan.

ESPO, as the pipe is also known, is designed to transport oil from central Russia to energy-thirsty China, and potentially Japan and other countries along the Pacific Rim.

The first stage of the project, from Taishet near Irkutsk, to Skovoridino in the Amur region, is scheduled for completion by the end of this year.

Construction of the line began in April 2006, but suffered a major setback months later when President Putin ordered its re-routing to move it further away from Lake Baikal. To the delight of environmentalists, ESPO was pushed back 200 kilometres from the banks of the UNESCO world heritage site.

But to the chagrin of investors, this added some 400 kilometres in length, and $US 12 billion to the project.

The pipeline, and with it the potential establishment of a special economic zone, will add to the growing economic confidence the area has enjoyed since the end of the politically tumultuous 1990s.

Already more than 40 sea-liners link Nakhodka with the rest of the world. Cargo turnover at our four biggest ports reached 36 million tonnes in 2007, an estimated increase of 6% on the previous year, according to the local officials.

The biggest growth of all was at Vostochnyi or Eastern port, which is the largest in Russia.

VICS, a major international container shipping company that operates out of Vostochnyi, says they expect to see substantial growth here in the future and are planning to increase their investment in the region to $US 350 million.

The prospect of another pipeline to service customers in Asia is sure to add to the shipping loads as the region ponders the benefits it may reap.