MOSCOW, Nov 27: Four Russian oil majors signed an initial agreement on Wednesday to build an Arctic export terminal that allows them to boost shipments to the United States as Washington seeks to reduce its dependence on Middle East oil.

LUKoil, Yukos, TNK, and Sibneft said in a memorandum they would build a 1,500-km pipeline to connect the northwestern port of Murmansk to an existing Russian oil network.

Representing four of Russia’s five top oil producers, the group said a more formal declaration of intent is set to be signed in April.

The companies also said they planned to build a deep-water terminal in Russia’s main ice-free northern port to accommodate 300,000-ton oil tankers that would be able to travel as far as the United States.

The project, which will cost between $3.4 and $4.5 billion, is expected to handle an estimated 80 million tons of oil per year, or 1.6 million bpd, also destined for Western Europe, the statement said.

Construction of the new pipeline and port may begin in 2004 and be completed by 2007, it said.

The new export route could boost US imports of Russian oil from less than one per cent of total US crude imports, or nine million bpd, to as much as 10 per cent.

The four companies hope that the new route could help them provide the United States with as much as 13 per cent of its total oil imports, Osman Salayev, head of a working group on the project, was quoted by news agency Prime-TASS as saying.

The deal could provide huge gains for both sides, as the United States seeks to reduce its reliance on Middle East oil, with a possible war in Iraq threatening to further destabilize an already tense region.

And new export routes are seen as essential to finding a market for the steadily increasing amount of oil produced in Russia, whose domestic demand has remained flat while production has shot up over the past four years.

Its current export routes are functioning at nearly full capacity, while oil production is expected to keep on booming until at least 2010.

Combined, LUKoil, Yukos, TNK, and Sibneft produce more than half of all oil in Russia, the world’s second-largest oil producer after Saudi Arabia. The country produces around seven million bpd and exports around three million bpd.

A fifth oil company, Surgutneftegaz, may also join the project, Interfax quoted Yukos chief Mikhail Khodorkovsky as saying.

“If those hoping to take part continue to come forward so quickly, then two strands may be built and the capacity could reach 120 million tons,” he said.

The new project seeks to fill a major gap in Russian oil transport, which has no simple export route to the United States and no port large enough to host the large tankers required to ship oil to North America.

Russian oil currently takes a complicated route to get across the Atlantic. It is loaded onto tankers in the Black Sea that are small enough to cross the Bosphoros Strait. The oil is then unloaded and re-loaded onto larger tankers that make their way across the Mediterranean Sea.—AFP