New pipeline boosts Russia-China oil ties

Jan. 4, 2011 at 1:54 PM
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MOSCOW, Jan. 4 (UPI) -- Russia, one of the world's largest oil exporters, has opened its first pipeline link to China.

Crude started gushing toward China through the Eastern Siberia-Pacific Ocean Pipeline on Saturday, with Russian deliveries expected to reach 15 million tons of crude this year.

The $25 billion pipeline links the Siberian city of Skovorodino to Daqing, China. Russia and China independently built two sections of the pipeline within their borders and connected them at the Amur River, which serves as the Russian-Chinese border in the region.

The link is nearly 1,700 miles long but will be extended in a second construction phase to more than 2,500 miles to eventually feed also Japan and South Korea, making it the longest pipeline in the world.

"The operation of the China-Russia crude oil pipeline is the start of a new phase in China-Russia energy cooperation," Yao Wei, general manager of the Pipeline Branch of Petro China was quoted as saying at the launch ceremony by Chinese state-owned news agency Xinhua.

PBPC operates the Chinese section of the pipeline, with Transneft responsible for the section in Russia.

The pipeline is a key instrument in a carefully growing energy relationship between Russia and China, one of the world's fastest-growing economies.

Russia with the move aims to feed the rallying Chinese hunger for energy. It also wants to become less dependent on energy deliveries to Europe, which has been in the process of diversifying its oil and natural gas import structure.

Some experts have warned that Russia may not have enough oil and gas for both markets. In September, Russia and China signed an agreement that foresees Gazprom exporting 30 billion cubic meters of gas per year to China for the next three decades. The deal is to back the Chinese climate protection strategy to reduce its use of coal in favor of natural gas, a cleaner fossil fuel.

Meanwhile, Russia is developing into the world's largest energy giant.

Russia's Energy Ministry recently said that Russia in 2010 produced 10.145 million barrels of crude per day, an increase of 2.2 percent compared to 2009 and the highest level since the breakup of the Soviet Union.

Natural gas production increased, by 12 percent, to 1.78 billion cubic meters per day, topped only by the United States, which produced roughly 2 billion cubic meters a day in 2010.

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