Oil Report

Russia's Putin launches new Pacific oil terminal

* Putin says new route to help conquer Asia-Pacific markets

* Project cost Russia $14 billion, more to be spent

KOZMINO, Russia, Dec 28 (Reuters) - Russia launched on Monday a new Pacific oil terminal that will allow the world’s largest energy producer to conquer Asian markets and divert some Siberian crude flows away from Europe.

“This is a great New Year present for Russia,” Prime Minister Vladimir Putin told workers under a sunny blue sky in the snow-covered port of Kozmino near the Pacific city of Vladivostok.

“This is the completion of one of the biggest projects in contemporary Russia. This is a strategic project because it allows (us) to come to new markets, the growing Asia-Pacific markets,” Putin said.

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.

Putin pressed a computer mouse button to start crude flows to fill a 100,000-tonne tanker, The Moscow University, which officials said will sail to Hong Kong despite stormy winds.

Putin said the terminal cost Russia’s pipeline monopoly Transneft $2 billion.

It also spent $12 billion to connect Siberian fields with a pipeline to East Siberia from where crude is sent to Kozmino by rail while a pipeline spur goes to China.

Transneft has to spend another $10 billion to build a pipeline to Kozmino, which is set to become Russia’s third largest seaborne oil outlet after Primorsk on the Baltic Sea and Novorossiisk on the Black Sea. [ID:nLDE5BH175]

The first tanker, which belongs to state-run oil firm Rosneft ROSN.MM, will carry ESPO crude -- named after the acronym of Russia's first pipeline to China and the Pacific.

Russia, the world’s top oil producer as Saudi Arabia keeps to OPEC-led supply curbs, plans to export 3.1 million tonnes (250,000 bpd) of the ESPO Blend via Kozmino in the first quarter of 2010.

Exports could rise to 600,000 barrels per day (bpd) in the next few years.

For a map of the ESPO pipeline, click: here

Although the pipeline will only be finished in four years, the terminal’s launch marks another victory for Putin’s energy policies.

In 2009, 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.

For an ANALYSIS on ESPO crude in Asia [ID:nTOE5BD04P]

For a FACTBOX on ESPO crude, click [ID:nTOE5BK09K] (Writing by Dmitry Zhdannikov; Editing by Michael Urquhart)