Delays in the East Siberia-Pacific Ocean (ESPO) pipeline, an ambitious project designed to pump up to 1.6 million barrels of crude per day eastward to Russia's Far Eastern regions, China and Asia Pacific countries, were the focus of a meeting in the Kremlin on Monday between President Dmitry Medvedev and Nikolai Tokarev, the head of the state-run pipeline monopoly Transneft, which is managing the project.

"It is necessary to forcefully deal with those contractors who failed to complete their work [on time], suing them and claiming back any funds paid in advance," Dmitry Medvedev said.

The first leg of the project was originally scheduled for completion in December 2008. However Tokarev said in February that the commissioning of this section was now only possible in the last quarter of 2009, partially because some subcontractors had failed to meet their obligations.

Medvedev told the Transneft president to cooperate with the government to develop measures that would prevent any further delays in the project.

A Transneft subsidiary unilaterally cancelled a contract in late April with the Krasnodarstroitransgaz subcontractor and filed a 29.7-billion-ruble ($1.25-billion) lawsuit against the company, claiming that the subcontractor had only completed 17% of the work scheduled. Transneft also applied to the Prosecutor General's Office to begin an embezzlement probe.

Moscow's Arbitration Court is to consider the suit on July 7. The court is also to rule on two similar suits worth a total of 1.92 billion rubles ($81 million).

The ESPO first stage envisages the construction of a 2,757-kilometer (1,713-mile) section with a capacity of 30 million tons (220.5 million bbl) of oil per year. The project's first leg will link Taishet, in East Siberia's Irkutsk Region, to Skovorodino, in the Amur Region, in Russia's Far East.

The second leg will stretch for 2,100 kilometers (1,304 miles) from Skovorodino to the Pacific. It will pump 367.5 million barrels of oil annually. The second stage also envisages an increase in the Taishet-Skovorodino pipeline's capacity to 588 million barrels.

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