CNPC to invest $700 million in Sino-Russia oil pipeline

April 2, 2002
State-owned China National Petroleum Corp. has earmarked $700 million to invest in a crude oil pipeline linking Russian oil production with refineries in northern China. Russian companies will invest another $1 billion in building the 2,400 km pipeline linking Angarsk oil field in Western Siberia's Irkutsk region with refineries near China's top producing oil field complex at Daqing.

By an OGJ correspondent

BEIJING, Apr. 2 -- State-owned China National Petroleum Corp. has earmarked $700 million to invest in a crude oil pipeline linking Russian oil production with refineries in northern China. Russian companies will invest another $1 billion in building the 2,400 km pipeline linking Angarsk oil field in Western Siberia's Irkutsk region with refineries near China's top producing oil field complex at Daqing.

The framework agreement on the construction of the pipeline was signed last September between CNPC and OAO Yukos, Russia's second largest oil company, and Transneft, Russia's major oil transportation company.
CNPC and its Russian partners are expected to complete by August a feasibility study on the pipeline project. It is expected to take another 10 months for the Chinese government to complete the approval process.

The project is scheduled to start construction in July 2003 and be completed in 2005.
It will transport an initial volume of 20 million tonnes/year (400,000 b/d) by 2005, and design capacity will be expandable to 30 million tonnes/year (600,000 b/d) by 2010.
The crude initially will come from existing fields Yukos operates in Western Siberia. The expanded capacity will accommodate a ramp-up in production when Yukos later brings on stream new fields in the Angarsk region.
Yukos currently ships crude by rail to China, at last report covering volumes of a combined 1.5 million tonnes/year (30,000 b/d) to Chinese state oil companies.

Route questions
It still wasn't clear at presstime whether the two sides had resolved their differences over routing, because the Chinese side indicated the capital outlays would cover a 2,400 km route (OGJ, June 12, 2000, p. 75).
The Russian companies earlier indicated a preference for a shorter, lower-cost route of 2,330 km, traversing Mongolia. The Chinese preferred the longer route of 2,500 km that would bypass Mongolia for security reasons.