The port sent its first cargo to Hong Kong, underlining its focus on catering for the demands of the Asian market and diverting some Siberian crude flows away from Europe.
Russia has long been seeking to diversify its oil exports away from the West amid often frosty relations with the European Union, its leading trade partner.
The oil exported via the Kozmino port is sourced from East Siberia. It is transported to Kozmino from the Meget railway terminal, in the Irkutsk region of Russia. From there it is sent to the Skovorodino oil terminal which itself started operations in October 2008. Kozmino terminal, which is operated by the national oil midstream monopoly Transneft, is intended to be the terminus of the Eastern Siberia-Pacific Ocean (ESPO) pipeline which is due to be completed in 2014-15. The Skovorodino oil terminal is the end point of Phase 1 of the ESPO pipeline. But in the meantime, Kozmino will receive oil delivered by rail from Skovorodino until the second phase has been completed. It is estimated that each railway oil cargo will hold around 35,000 barrels of oil. The port of Kozmino is considered a vital part of Russia’s Asia Pacific economic strategy. Geographically, it is ideally located in the Sea of Japan, offering links to the leading regional consumers: Japan, South Korea and most importantly, energy-hungry China. The port will offer an outlet for oil producers in East Siberia, including Rosneft, Surgutneftegaz and TNK-BK.
At present, Russia is the world’s top oil producer as Saudi Arabia keeps to OPEC-led supply curbs. Russia plans to export 3.1 million metric tons (250,000 barrels per day) of the ESPO Blend via Kozmino in the first quarter of 2010. Looking forward, exports could rise to 600,000 barrels per day (bpd) in the next few years. Although the pipeline will only be finished in four years from now, on a more qualitative level the terminal’s launch marks another victory for Putin’s energy policies. Last year, Putin, the chief lobbyist for Russia’s energy interests, secured permissions for gas pipelines that will run through the Black and Baltic Seas, delivering Russian gas to Europe and bypassing troublesome transit states.