Thursday, January 07, 2010

king of the north?

The Trumpet | Over the next few days, Russia will change the world. It has completed a new oil pipeline and port complex that sets Russia up to become a more powerful oil exporter than Saudi Arabia. The ramifications for Europe and Asia are profound: The shape of the global economy—and the global balance of power—will be altered forever.

December 28 was a big day of ceremony in Russia. Prime Minister Vladimir Putin pushed a button that transformed global oil dynamics—especially for Asia and Europe. The button released thousands of barrels of Siberian crude into a waiting Russian supertanker and heralded the opening of Russia’s first modern Pacific-based oil export facilities.

The multibillion-dollar, state-of-the-art oil terminal was a “great New Year present for Russia,” Putin said during the inauguration. The strategic terminal, located in the city of Kozmino on the coast of the Sea of Japan, is one of the “biggest projects in contemporary Russia” he said, not only in “modern Russia,” but “the former Soviet Union too.”

Putin has every right to be enthusiastic about his new port. Kozmino will unlock a two-way gate through which Russia’s vast Siberian oilfields will gush into Asia’s energy-hungry economies—and Chinese, Korean and Japanese currency will flow into Russia.

If just the seven ships currently waiting to berth are all filled during January, the port of Kozmino will instantly become Russia’s third-most important oil outlet.

According to Reuters, the first oil transport loads on January 15. In a symbolic move highlighting Russia’s warming relationship with China, Hong Kong will receive the first shipment.

After that, Kozmino’s importance will exponentially grow over the next year. Currently, all Siberian oil shipments into Kozmino are delivered by train—but that will soon change. Phase one of the East Siberian-Pacific Ocean Pipeline (espo) was also completed during December. Phase two will soon connect the Siberian fields directly to the new port. When phase two is finished in 2014, total exports could jump from the current rate of 250,000 barrels per day to over 1 million. Kozmino will transform into one of the largest oil centers in the world—capable of handling 14 percent of total Russian oil exports. It will be one of the most strategic geopolitical assets in Russia’s arsenal.