Ust-Luga is the end of the much touted Baltic Pipeline System-2 export route, built by the country’s national oil pipeline operator Transneft, which had been expected to start flowing crude late last year.

The launch was delayed however after Russia’s technical supervisory body Rostehnadzor revealed 23 violations at the Ust-Luga terminal construction site and the port, including a 3 meter-deep collapse of the docks and incomplete dredging works.

A source at Transneft told Platts Thursday that no official decision about the port’s formal startup has yet been made, although he added that one is expected within the next 24 hours.

“We should have a formal decision by the end of Friday. The act has not yet been signed by Rostehnadzor,” the source said.

Traders said Thursday that a 100,000 mt Urals crude cargo is scheduled to load from Ust-Luga February 27-28.

The quality of the crude “fully confirms to quality of Urals oil and meets its specifications,” according to information in the tender document. The tender is due to close Friday, February 17.

According to the Transneft source, no official loading schedule has yet been prepared for Urals crude flows from Ust-Luga in March.

But he said there was another 100,000 mt cargo of Urals already waiting to load at the port, adding that it belonged to Rosneft.

The Rosneft Urals stem – which was acquired by Warly International from the Russian state-owned oil company in a tender on November 11 – had initially been scheduled to load November 29-30. However, the cargo was then shifted to the middle of December as the port was not ready to begin operations, with more technical examinations required.

BTS-2

The plan for the new export route, known by its Russian acronym BTS-2, gives Russian crude oil a new export option and was hatched in early 2007 after a spat with Belarus over transit fees and customs duties. This led to an unprecedented interruption in supplies to several eastern European countries. 

The project has been criticized for providing a new export outlet for Russian crude despite there being no real limitation to existing routes, but Moscow pushed ahead, promoting the geopolitical advantages of the pipeline.

Construction work on the link started in June 2009 and the startup of the pipeline was always expected before the end of 2011. But despite loading programs being published in late September, it suffered from a number of technical problems. Media reports in November suggested that Rostehnadzor could delay the launch of BTS-2 until February because of the docks’ collapse.

Initially, the 1,000 km BTS-2 is projected to carry around 30 million mt/year (600,000 b/d) of crude to European markets, with the capacity likely to increase to 38 million mt/year at a later stage. 

BTS-2 is viewed as a strategic project for Russia as it will allow the country to reduce its dependence on transit via the Druzhba pipeline, which runs across Belarus and Ukraine. 

It is not yet clear how Ust-Luga exports might affect crude oil flows through the other major export sea routes such as the Baltic port of Primorsk and Novorossiisk on the Black Sea. It is the view of some industry sources that most of the 30 million mt/year of crude required to fill the Ust-Luga pipeline will be taken from Druzhba volumes. Others however believe the export rate via Novorossiisk will also fall, with some Urals crude volumes redirected to Ust-Luga. In addition, some expect to see a decline in crude export volumes from Primorsk.

Russia’s existing BTS-1 system, which terminates at the port of Primorsk, currently operates at rates exceeding its throughput capacity. This is expected to result in the redirection of some of the crude to BTS-2.

In addition to crude exports, there are plans to build an LPG export facility at Ust-Luga.