Friday, May 13, 2016

CNPC to start laying second China-Russia oil pipeline in June

BEIJING (Bloomberg) -- China National Petroleum Corp., the country’s biggest oil and gas producer, will start laying a second domestic oil pipeline in June to allow for increased Russian crude supplies to flow to China’s northeastern city of Daqing.

The project between the Chinese border city of Mohe and Daqing runs parallel to an existing spur off of Russia’s East Siberia-Pacific Ocean crude pipeline. The 942-km (585-mile) line has received construction approval from the National Development and Reform Commission, China’s top economic planner, and is expected to be completed by October 2017, CNPC said in a statement on its website Thursday. The two pipelines will have a combined annual capacity of 30 million metric tons of crude.

“The second oil pipeline will help integrate northeast China’s crude resources, and further improve the safety and reliability of China’s crude oil supplies,” CNPC said in the statement.

The energy relationship between the two neighbors—one of the world’s biggest oil producers next door to the biggest oil user after the U.S.—has continued to deepen since Russia started sending oil supplies to China from the spur off the ESPO pipeline in 2011. Imports of Russian crude last year jumped 28%, placing the country as China’s largest supplier on an annual basis after Saudi Arabia.

Energy Links

Russia’s Transneft will be ready to ship 30 million tons of oil a year to China through the link by Jan. 1, 2018, V.P. Sergei Andronov said in April. Russia’s OAO Rosneft signed a $270-billion deal with CNPC in 2013 to supply about 360 million metric tons of crude to China over 25 years, the second of two crude-supply deals between the countries.

China and Russia are also considering building a second natural gas pipeline to transport as much as 30 Bcm of natural gas annually from West Siberia to China over 30 years. The two signed a $400-billion pact in 2014 to send 38 Bcm of natural gas annually over 30 years to China via East Siberia by as soon as 2018.


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