FSU Pipeline Optionality Shifts Export Flows

Export flows out of Former Soviet Union (FSU) states continue to undergo rather dramatic shifts. A recently completed expansion of the Eastern Siberia-Pacific Ocean (ESPO-2) pipeline will give producers in the FSU further access to Asia via the terminal at Kozmino. The extension, along with a plethora of recently completed and planned pipeline expansions, was brought about by the need to create alternate markets due to Russian conflicts with neighbors over exports via the Druzhba pipeline and higher crude demand growth in Asia. Fueled by this growth, various readings of Asian spot crude prices have been strengthening attractively against European prices over the past five years, although spreads have begun to tighten as additional Asian capacity comes online. Download here