China Pushes for Twofold Increase in Russian Oil Export

VLADIVOSTOK. February 17. VOSTOK-MEDIA – Beijing has requested Moscow to double its volume of crude oil export through Eastern Siberia-Pacific Ocean (ESPO) oil pipeline to China, from 15 to 30 million tons annually. The increase in the volume of oil supplies is a prerequisite for the commencement of the construction of the Sino-Russian oil refinery scheduled on 2010.

Chinese oil magnate CNPC stated that if Rosneft fails to provide the required supplies of crude it would have to buy crude at the international market.

Earlier, it was planned that 15 million tons of oil annually supplied through ESPO pipeline spur would be sufficient amount for the oil refinery in the Chinese coastal city of Tianjin, Kommersant daily wrote. However, CNPC said that the Sino-Russian oil refinery would require additional oil supplies. CNPC seems to be trying to withdraw from the oil refinery construction project. Meanwhile, Rosneft has developed its own project of construction of oil refinery in Primorsk, Leningrad Oblast, capable of 15 million tons annually.

In 2011, Rosneft is expected to begin supplies of 15 million tons of crude produced in Easter Siberia oilfields annually. The contract of Rosneft and CNPC will be valid for 20 years.

The oil deliveries to China will be made in exchange for $25 billion of Chinese loans, which had been taken out by Rosneft and Transneft. At present, Rosneft has a five-year contract with CNPC to supply 48.4 million tons of crude, which expires in 2010.

ESPO pipeline, which is being laid by the route of Taishet-Kazachinskoye-Skovorodino-Kozmino, will be used to export Russian crude to Asia-Pacific markets. Rosneft has already constructed the first stage of the pipeline running from Taishet to Skovorodino, from where the crude is delivered via railway to Kozmino oil terminal.

The capacity of the first stage of the pipeline, running from Taishet to Skovorodino, is 30 million tons of oil per year, the second stage – 50 million tons. The pipeline is built and operated by Russian pipeline company Transneft.

Under the agreement between the two countries, Russia will build a 60-km spur from Skovorodino to the border, while China will construct a 950-km long section from China-Russian border to Daqing.