McDermott's contract on laying pipeline across Caspian seabed contradicts earlier statement by Russian official

The company will lay a 58-kilometer (36-mile) pipeline to the Yury Korchagin oil and gas field, located in the Russian sector of the Caspian Sea. The project is expected to come on stream in 2008, with an annual capacity of 10 billion cubic meters of gas and 4 million metric tons (80,000 bbl/d) of oil.

McDermott Caspian Contractors Inc. will be in charge of design and engineering, construction and test work on the project, whose development will require an investment of $700 million, according to LUKoil.

The contract appears to contradict a statement Thursday by an official with the Russian Natural Resources Ministry opposing any projects to lay natural gas or oil pipelines across the Caspian Sea floor.

Since the early 2000s, the ex-Soviet republics of Kazakhstan and Azerbaijan have been considering projects to lay natural gas or oil pipelines across the bed of the Caspian Sea and bypassing Russia. However, Moscow has consistently opposed the idea, citing environmental concerns.

"We are worried by reports from various sources regarding projects being prepared to lay down a pipeline [across the Caspian Sea], primarily by those that propose transporting hydrocarbons while bypassing Russia," Amirkhan Amirkhanov, a deputy head of the ministry's department for state policy on environmental protection, said.

He said that no matter what the scale of a pipeline project, and more importantly, of an oil pipeline project might be, all would be unacceptable from an environmental standpoint.

"This [the Caspian Sea] is a closed system, with no outlets to the world's oceans, and everything that happens there remain there," Amirkhanov said. "This is a problem that concerns the future of the Caspian Sea. Considering the high seismic activity in the region, with tremors of up to nine on the Richter scale, the projects could have dangerous consequences." RIA Novosti