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Sino-Russian pipeline compromise
reached
BEIJING - Negotiations between
China and Russia on an oil pipeline ended recently
with a compromise proposal.
According to the
proposal, the Angarsk-Daqing oil pipeline (Sino-Russian
Scheme) and the Angarsk-Nakhadka pipeline (Far East
Scheme) will be joined with a feeder to the
Angarsk-Daqing oil pipeline in Daqing and priority will
be given to the construction of the trunk pipeline in
Daqing, China.
According to Ren Chuanjun, senior
deputy president of PetroChina, who has been to Russia
for the talks, such a scheme is agreeable to PetroChina.
After the project goes into operation, it will directly
help China change its present situation to importing 56
percent of its total oil from the Middle East. By 2010,
20-30 percent of China's oil will be imported from
Russia, thus directly improving the situation of China's
oil security.
For some time, Russia could hardly decide
which scheme (Sino-Russian Scheme or Far East Scheme)
would be used. Disputes between LUKoil and Transneft
were under way. According to LUKoil, if the oil
pipeline were built unilaterally, it might suffer after
the 25-year period of oil supply expires. However,
Transneft opposes the Far East Scheme because most of
the oil pipelines are within the boundary of Russia and
the company would be forced to invest a great deal of
funds and effort constructing them.
In consideration
of the interest of all sides, the Russian Ministry
of Energy held a government meeting attended by all
sides, deciding to make earnest preparations before the
signing of the agreement in mid-March. The meeting held
that only the compromise proposal conforms to the interests
of Russia. The construction of a two-terminal
oil pipeline will bring more foreign exchange to this
oil exporter. In addition, it will bring more tax
revenue for the federation.
Considering that the European
oil market is shrinking, Russia began to reduce oil
flow from European pipelines. China, where rapid
economic growth requires the development of oil
resources, and Japan, which almost completely relies on
imported oil, offers a thirsty market for Russian oil.
The compromise proposal did not
designate when the second phase of the project would
begin because Russia will supply at least 80 million tons of
oil after the trunk and feeder pipelines are in operation,
and it does not have that ability at present.
Besides, Russia will need US$2.5 billion to
build the 1,600-kilometer-long oil pipeline in
the first construction phase, and $5 billion in
building the 3,800km pipeline in the second
phase.
To import oil from Russia will help
change China's oil import structure. Of China's total
imported oil, 56 percent comes from the Middle East, 14
percent from the Asia-Pacific Region, 23.5 percent from
Africa and 6.5 percent from other parts of the world.
It is expected that China's imported oil will
reach 100 million tons by 2010. This means that 20-30
percent of China's imported oil will come from Russia,
and its oil security will be eased. In addition,
northeastern China has a strong refining capacity. The
present oilfield reserves can only satisfy 70 percent of
throughput in this area. The import of oil from Russia
will help alleviate oil shortages.
(Asia
Pulse/XIC)
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