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Oil Report

FACTBOX-Russia's ESPO oil pipeline link to China

BEIJING, Sept 27 (Reuters) - Russia and China celebrated the completion of the Chinese branch of a pipeline on Monday that would supply Russian crude to China for 20 years. [ID:nTOE68Q03P]

The following are facts about the East Siberia to Pacific Ocean Pipeline (ESPO):

-- At current crude prices, supplies from the world’s No.1 crude producer to the No.2 consumer would be worth some $150 billion over the duration of the deal, with volumes of 300,000 barrels per day (bpd) pumped through the ESPO pipeline.

-- The 925-km trunk line links the Chinese border town of Mohe to Daqing, a main transfer hub in northeast China’s Helongjiang province. In August, Russia completed a 70-km spur from Skovorodino near Russia’s Pacific coast to Mohe. The spur brings crude from a longer pipeline linking the East Siberian town of Taishet to Skovorodino.

-- Rosneft, Russia's largest oil firm, will sell the crude to China's top energy firm PetroChina 0857.HK.

-- The pipeline crude, called ESPO blend, will start flowing to China in November or December, said Nikolai Tokarev, head of Russian state pipeline monopoly Transneft on Monday. Test volumes would be 600,000 tonnes (4.3 million barrels), Tokarev said.

-- The pipeline was set to bring 300,000 bpd across the border from Jan. 1, 2011.

-- PetroChina expected to begin testing the trunk line from Mohe to Daqing by the end of October, CNPC, parent of PetroChina, said on Monday on its website (www.cnpc.com.cn).

-- The Chinese firm has said previously it would add 10 million barrels of storage facilities in Daqing to store the Russian oil by the end of this year.

-- PetroChina has allocated most of the ESPO crude to its subsidiary refinery at Liaoyang, in northeast Liaoning province, where it has built a 200,000-bpd refinery and is adding units to process exclusively ESPO crude.

-- Other PetroChina refineries in China’s northeast would also take in the new Russian oil, such as Jilin and Dalian refineries, PetroChina officials have said.

-- China’s northeast, including Helongjiang, Jilin and Liaoning provinces, is home to nearly a dozen refining and petrochemical plants, mostly operated by PetroChina.

-- PetroChina has since 2009 also been upgrading its crude pipeline network in the region to accommodate the new Russian oil. For more than four decades, the network has been transporting locally produced crude including flagship Daqing.

-- PetroChina’s allocation of the crude to existing plants leaves none for the planned 260,000-bpd joint venture refinery between Rosneft and CNPC. The $5 billion venture will instead buy oil from the market, said a spokesman for Russia’s deputy Prime Minister Igor Sechin last week. [ID:nLDE68K024]

-- Russia started exports of ESPO crude in December last year, by shipping the oil hundreds of miles by rail from Skovorodino to the Pacific port of Kozmino, near Vladivostok, where it is loaded onto tankers for shipment across the Pacific basin.

-- China is among the customers including Japan, South Korea and even the U.S. who have been taking the new Russian oil.

-- Russia expects to complete the second leg of the pipeline to the Pacific by 2012, replacing the rail-car mechanism and reaching pipeline capacity for the entire ESPO system of 600,000 bpd.

For a TABLE of ESPO buyers, double click on [ID:nSGE66R0GK]

For a FACTBOX on China’s refinery expansion plans double click on [ID:nTOE689053]

For a related ANALYSIS double click on [ID:nSGE64502Z]

For a map of the ESPO pipeline:

here (Reporting by Chen Aizhu, Jim Bai and Denis Dyomkin in Beijing and Barbajosa Alejandro in Singapore; Editing by Michael Urquhart)

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