PetroChina's Dalian refinery nearly doubles Russian pipeline oil supply - source

BEIJING (Reuters) - PetroChina 0857.HK has nearly doubled the amount of Russian crude being processed at its refinery in Dalian, the company's biggest, since January, as a new supply agreement has come into effect, a senior industry source with direct knowledge of the matter said on Wednesday.

FILE PHOTO: PetroChina's logo is seen at its petrol station in Beijing, China, March 21, 2016. REUTERS/Kim Kyung-Hoon/File Photo

The Dalian Petrochemical Corp, located in the northeast port city of Dalian, is expected to process 13 million tonnes, or 260,000 barrels per day (bpd) of Russian pipeline crude this year, up by about 85 to 90 percent from last year’s level, the source said.

Dalian has the capacity to process about 410,000 bpd of crude.

The increase follows an agreement worked out between the Russian and Chinese governments under which Russia's top oil producer Rosneft ROSN.MM will supply 30 million tonnes of ESPO Blend crude to PetroChina in 2018, or about 600,000 bpd. That would represent an increase of 50 percent over 2017 volumes.

The additional oil sent to Dalian is about 120,000 bpd and will make up the bulk of the Russian increases.

The increased pipeline supplies will displace seaborne shipments of ESPO crude through the Far East port of Kozmino and shipments from the Middle East that Dalian has previously taken, the source said.

“The plant will be processing pipeline crude only this year,” said the source, adding that the plant also takes in pipeline crude from the PetroChina-run Daqing oilfield in the northeastern province of Heilongjiang.

A PetroChina spokesman did not immediately respond to request for comment.

PetroChina has designated three refineries in northeast China - Dalian, Liaoyang and Jilin - as the main receiving points for the increased Russian supply. Liaoyang will begin taking more crude once a major upgrade is completed at the end of this year.

The new volumes will flow as a result of Russia and China expanding the East Siberian Pacific Ocean pipeline that starts at Rosneft’s oilfields in East Siberia and enters China at border town of Mohe.

Official export schedule data released by Russia’s Energy Ministry shows the country is expected to send to PetroChina 6.7 million tonnes of crude oil via the pipeline during the first three months of this year.

That would be 63 percent more than the levels recorded during the same period last year.

Reporting by Chen Aizhu in Beijing, additional reporting by Olga Yagova in Moscow, Editing by Christian Schmollinger and Sherry Jacob-Phillips