Russia in milestone oil pipeline supply to China

MOSCOW Sat Jan 1, 2011 5:50am EST

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MOSCOW (Reuters) - Russia, the world's top crude exporter, said it had begun scheduled oil shipments to China via an East Siberian link on Saturday as the Kremlin cements ties with its energy-hungry neighbor.

So far, Russia's 50,000-km oil pipeline network has been concentrated in West Siberia and run toward Europe.

With the commissioning of the Eastern Siberia - Pacific Ocean pipeline (ESPO), Moscow is carving out a large chunk of the world's second-largest energy consumers' market.

"The shipments started at 0030 (4:30 p.m. EST on Friday). We plan to pump 1.3 million tonnes of oil in January," Igor Dyomin, a spokesman for Russian oil pipeline monopoly Transneft, told Reuters.

According to the final schedule for crude oil exports and transit, in January-March 2011, Russia will ship 3.68 million tonnes of oil to China via ESPO.

An annual plan envisages the supply of 15 million tonnes (300,000 barrels per day). Many oil market participants expected it would effectively double Russian sales to China, which totaled 12.8 million tonnes (308,000 bpd) in the first 10 months of 2010.

Transneft started to ship the barrels along the first stage of the pipeline, which runs in a 2,757-km arch above Lake Baikal. So far the oil had been transported only by rail to the Pacific port of Kozmino.

On Saturday, the crude flowed to Daqing in China from Russia's Skovorodino via the pipeline.

When the 4,070-km the pipeline's second stage is finished in 2013, it will be the world's longest. At a cost of $25 billion, it dwarfs all other infrastructure projects in post-Soviet Russia.

Russian state oil firm Rosneft has been sending oil to China by rail ever since it bought the biggest unit of defunct oil giant Yukos six years ago. The purchase was facilitated by a $6 billion loan from China, which effectively prepaid $17 per barrel for 48.4 million tonnes of oil.

That contract ran out this year, and Rosneft decided not to extend it, citing the low selling price.

(Reporting by Vladimir Soldatkin; editing by Philippa Fletcher)

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Comments (4)
bao wrote:
Good for Russia and China. Looks like communism will rule in the new year as it did in the last.

Jan 01, 2011 6:05pm EST  --  Report as abuse
Non-OPEC suppliers (with 60% of all traded oil) will continue to take the lead in 2011 while OPEC suppliers see thgeir reserves and supplies shrink. Inflation and economic decline in the west will continue unabated and the result will see a collapse of the fiat-money system and financial industries. Peak-oil will hit the front pages.

Jan 01, 2011 10:05pm EST  --  Report as abuse
iq160 wrote:
“bao” is either an idiot or commie himself. Neither Russia nor China have “communist” systems. China has a market driven economy as long as the public doesn’t push for political reforms. Russia is a corrupt version of crony capitalism where favored political operatives are given dominant positions and left to pay their bribes in piece.

As for “fiat money systems” what money system isn’t a fiat system? It’s clear that the author of that comment doesn’t understand that money really is. It is a representation of one’s productivity as a part of the whole. It allows the exchange of one’s efforts with another’s efforts in a complex economy (beyond simple trade and barter). Work output (and not govt redistribution) is what creates food, housing and everything else we take for granted. Political systems do NOT create anything, quite the opposite, they destroy the work ethic.

Jan 02, 2011 4:11am EST  --  Report as abuse
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