#1 - JRL 6586
FEATURE-Russia Arctic naval base seeks U.S. oil mission
By Natalia Andreassen

MURMANSK, Russia, Dec 4 (Reuters) - Russia's Arctic port of Murmansk, a Soviet-era bastion of the Cold War, is becoming a symbol of a new partnership with the U.S., in which oil is set to overshadow nuclear submarines.

Last week, Russia's largest private oil firms agreed to build here by 2007 a multi-billion dollar oil export terminal, designed to open up new markets for their booming oil output and help the United States cut its dependency on the Middle East.

And Murmansk, halfway between Moscow and the North Pole, a place where the sun does not rise for two months of the year, is welcoming the idea as a last hope to escape poverty and unemployment, endemic in this once thriving Red Army naval base since the collapse of the Soviet Union more than a decade ago.

"We are living in oblivion. Today no one wants to be a naval officer. And because so far there has been nothing else to do in Murmansk, oil is probably a solution. Not for us but for future generations," said Yelena, 46, the wife of a naval officer.

For many in Murmansk, where in Soviet times the city's residents received privileges for enduring a harsh climate to defend the motherland, pride is all they have left.

"Some people believe Russia's north has no chance of surviving and Arctic towns will simply gradually die. I think this is totally wrong," said Vyacheslav Popov, who represents Murmansk in Russia's upper chamber of parliament.

"This oil project will boost Russia's economic security and help to restore our previous glory."

Popov knows all about how quickly glory can turn to shame. A career admiral, he was comander of Russia's Northern Fleet when the nuclear-powered submarine Kursk crashed to the bottom of the Barents Sea with the loss of the entire 118 crew, the worst disaster in modern Russian naval history.

IDEAL LOCATION

Murmansk, near the frontier with Finland and Norway, is a unique port in Russia's north with a vast bay which never ices over even when temperatures plummet to minus 30 degrees Celsius (minus 22 Fahrenheit).

"I'm so pleased that our natural advantages are finally recognised," Murmansk's regional governor Yuri Yevdokimov told oil executives.

Four Russian majors LUKOIL (LKOH.RTS), YUKOS (YUKO.RTS), Tyumen oil Co (TNK) and Sibneft (SIBN.RTS), which together account for more than half of Russia's eight million barrels per day (bpd) output, promised their project would create more jobs.

It will also serve further the rapprochement of Russia and the United States. The two countries have cosied up to each other, particularly since last year's September 11 attacks on the U.S.

"It is extremely important that the Russia-U.S. relationship is developing in a constructive way. It convinces us that we will secure access to the U.S. oil market and U.S. oil firms will gradually join our production projects," Mikhail Khodorkovsky, CEO of Russia's second largest oil firm YUKOS told reporters.

Russia, the world's second largest oil exporter, ships the bulk of its crude to Europe and needs deep water ports to load supertankers and make trans-Atlantic shipments profitable.

Murmansk, the deepest northern port in Russia, is emerging just as the country's output is booming for the fourth straight year and Russia wants to supply more than 10 percent of U.S. crude oil imports, currently dominated by more traditional but politically turbulent Middle East suppliers.

Oil majors say the new port's advantages will be ideal as the sea route to U.S. east coast from Murmansk will be just 5,800 miles (9,334 km), compared to 12,800 miles from the Gulf.

ECOLOGICAL WORRIES

The exact location of the new terminal is to be announced.

"We don't want profiteers rushing to buy land near Murmansk. There is more that 60 km (37 miles) of coast, which perfectly meets our needs, so the terminal can be built anywhere," said the head of LUKOIL Vagit Alekperov.

Yevdokimov says the energy-starved region is eagerly awaiting just a tiny portion of fuel from the export pipeline.

"Unlike other Russia's European regions, Murmansk does not have natural gas supplies nor even a tiny refinery. So it could become a colossal project for us," he said.

The project's image is clouded only by the concerns of environmentalists, who say any leaks from a vast oil terminal or the tankers it serves could further damage the ecology of Murmansk.

The port is already home to an estimated two thirds of Russia's 122 decommissioned nuclear submarines, the reactors of which have never been removed, and radiation reports are frequently read out on the radio station along with the weather forecast.

"When you have an oil spill from a supertanker in the Arctic it takes you decades to restore nature as oil decomposes very slowly," said Oganes Targulyan from Greenpeace in Moscow.