LUKoil signs cooperation agreement with Moscow for a new pipeline

Russian oil major LUKoil announced that a cooperation agreement for the construction of a new 500-kilometer oil products pipeline was signed by LUKoil CEO Vagit Alekperov and Sergei Shoigu, Moscow region’s governor. The US$500-million oil products pipeline will replace an existing rail link, and will connect LUKoil’s Nizhny Novgorod refinery to the Moscow region. The new pipeline will also ensure adequate supplies of gasoline and diesel fuel to the Russian capital and keep retail fuel prices in check. It will also cut LUKoil’s transportation costs for gasoline and diesel fuel and jet fuel by around 10%. LUKoil is the largest supplier of jet fuel to the airports in Moscow; the capital and its surrounding areas account for around 20% of the country’s total gasoline consumption and 10% of the diesel fuel usage. The initiative to build the pipeline has been undertaken by LUKoil, but Alekperov said that Rosneft, the top Russian petroleum company, and Brashneft, are both interested in participating in the project. According to Alekperov, state-run Transneft could operate the pipeline. (July 6, 2012)