Expanding Russias capacity to export oil in order to keep pace with the countrys growing production is important to both Russian policy-makers and oil companies. However, the two sides are sometimes at odds over how best to boost the countrys export capacity. Crude oil exports via pipeline fall under the exclusive jurisdiction of Russias state-owned pipeline monopoly, Transneft. But bottlenecks in the Transneft system make the companys export capacity incapable of meeting oil producers export ambitions. Although Russia produces almost 7 million bbl/d of liquids (in net) for export, only about 4 million bbl/d can be transported by major trunk pipelines; the rest must be shipped by rail and river routes. Most of the 4 million bbl/d transported via alternative routes are petroleum by-products. Some of the crude oil export capacity deficit is also overcome by exporting these petroleum products. However, all of these alternate methods of exporting oil are much more costly than shipment via pipeline and could become less economical if world oil prices fall. The Russian government and Transneft have acknowledged the capacity problem and have taken steps towards developing new export infrastructure. At issue, however, is not only the direction and scope of enhancements to the countrys export infrastructure, but also the potential role that private firms and investors may play in these projects, presumably at the expense of state-owned Transneft. During the first half of 2005, Russia exported almost 4 million bbl/d of crude oil, well below predictions of 5.5 million bbl/d in late 2004 but 11 percent higher than exports during the same period of 2004. Russia also exported roughly 116,000 bbl/d to China during 2004, expects to export 160,000 bbl/d during 2005, and projects exports of 300,000 bbl/d in 2006. Under the Ministrys economic forecast, Russian oil exports could grow to around 5.8 million bbl/d in 2007, and up to 6.2 million bbl/d by 2015.
Rail exports comprise roughly 5% of Russian crude oil exports. But unless significant investment flows into expanding the Russian pipeline networks capacity, non-pipeline transported exports are poised to increase even more in the upcoming years. As Chinas growth continues, rail routes are the only way to provide Russian crude oil to East Asia. In the absence of a dedicated pipeline route, Russian crude oil is exported via rail to the northeast cities of Harbin and Daqing and to central China via Mongolia. Rail exports of crude oil to China will increase from approximately 200,000 bbl/d in 2005 to 300,000 bbl/d by 2006 according to Chinas Ministry of Railways. Outside observers have expressed concerns that the governments treatment of Yukos could affect rail exports to China since Yukos is the leading supplier of oil exports to China. However, since the auction of Yuganskneftegaz, Lukoil has taken over the role of rail supplier.
After Russian oil flows through the various pipelines described above, crude oil and products are shipped onward to Europe, the United States, and Asia via tanker. The bulk of Russias oil is shipped to the Mediterranean and to Asia via tankers in the Black Sea, mostly from the port of Novorossiysk. With the opening of the BTC pipeline in early 2006 and the higher export aspirations of the CPC consortium owners , it is now unclear how much oil will still be shipped out of the Black Sea ports. Since the economic viability of the BTC pipeline is as of yet untested, some analysts expect Novorossiysk (along with Batumi, Supsa, and Odessa) to remain at current levels (approximately 1.7 million bbl/d in 2003). Other analysts expect that if Azerbaijan does actually divert all of its oil shipments via BTC, the exports from Novorossiysk will decrease. News reports indicate a floating proposal that the Baku-Novorossiysk line might then be reversed, allowing for 250,000 bbl/d more crude oil exports to be sent from Russia to Baku and then along the BTC route. Also, the only area of expansion in the Russian pipeline network is near St. Petersburg, and the Baku-Novorossiysk line is the only one with spare capacity.