Russia`s Prime Minister Vladimir Putin signed on Monday a decree ordering the construction of a new oil pipeline to the Baltic Sea, designed to further cut exports of Russian crude via Ukraine, Belarus and Poland.
The government said on its website Putin ordered a one million barrels-per-day pipeline be built to the Baltic port of Ust Luga, near Russia`s largest oil port of Primorsk, with the first stage to ship 600,000 bpd from the third quarter of 2012.
It also said the project would be financed mainly through the issuance of long-term rouble bonds by pipeline monopoly Transneft to be allocated via a closed subscription mainly to state financial institutions, such as VEB bank.
Transneft designed the project nearly two years ago after a pricing dispute with Belarus briefly disrupted deliveries of Russian crude via the Druzhba pipeline to Poland and Germany.
Since then Transneft has also said the project would help reduce Russia`s oil transits via Ukraine as well as re-exports of Russian crude via Poland.
Putin`s approval is a big boost for Transneft, which also needs to find billions of dollars to finish building Russia`s first pipeline to Asia and has been negotiating a $10 billion loan with China as part of a broader crude supply deal.
