Russia Starts Oil Pipeline to China as Putin Attempts to Diversify Exports
By Stephen Bierman - Dec 31, 2010
Russia will start its first oil pipeline to China at midnight, increasing crude exports to the world’s largest energy consumer.
OAO Rosneft, Russia’s largest oil producer, and state-run pipeline operator OAO Transneft will sell China 15 million metric tons (110 million barrels) a year for 20 years through the East Siberia Pacific Ocean pipeline, known as ESPO, after China provided the companies $25 billion in oil-backed loans to finance construction and development of deposits.
Russia currently supplies crude to China by rail and shipped 1.06 million tons in November, making it the Asian country’s seventh-largest supplier, according to Chinese customs statistics on Bloomberg.
Prime Minister Vladimir Putin has said the $26 billion project will diversify the delivery of Russia’s natural resources beyond Europe. Russia also hopes the pipeline will unlock millions of barrels of resources trapped in remote deposits along its path.
“Asian oil buyers clearly gained,” Ed Chow, a senior fellow at the Center for Strategic & International Studies, said by e-mail. China won’t pay a premium for the crude, and the cost of the pipe will be distributed among Russian oil producers, he said.
The ESPO pipeline when completed in 2014 will span about 4,700 kilometers (2,900 miles), longer than the distance from London to Tehran. It will carry oil from Taishet, beyond the west Siberian basin where most of Russia’s oil is produced, to Russia’s Pacific port of Kozmino.
Read more
bloomberg.com
|
