Eric Watkins
Oil Diplomacy Editor
LOS ANGELES, Oct. 23 -- Russian Energy Minister Sergei Shmatko, while acknowledging a new agreement to sell oil to China, stated that a projected East Siberia Pacific Ocean (ESPO) pipeline spur sought by the Chinese will not be ready before 2009.
Concerning supplies of oil, Shmatko said Russia's OAO Rosneft and China National Petroleum Corp. may soon sign a new long-term supply deal. "We believe that in the next month to month-and-a-half, the main parameters will be agreed upon," said Shmatko, after meeting in Moscow with China's top energy official, Zhang Goubao.
Shmatko did not specify any volumes or price concerning the agreement, which will be for at least 15 years, but he said that Russia was satisfied with the price formula under discussion.
Meanwhile, regarding the projected pipeline spur, Shmatko was emphatic: "There is no way. It cannot be put into operation next year," he said when asked if a spur would be built from the ESPO line to the Chinese border in 2009. He said the political will is there, but that an agreement on the pipeline depends on the commercial terms.
For years, the two countries have been in talks over a 67-km, 300,000 b/d line spur to the Chinese border from the Russian town of Skovorodino, the end point of the first stage of the 4,700-km, 1.6 million b/d capacity ESPO line.
The first phase of the ESPO pipeline, connecting oil-producing regions to Skovorodino, was initially scheduled to go into operation in late 2009 but its launch has been pushed back to fourth quarter 2009.
China is said to be already carrying out active preparations for the extension of the pipeline spur, and officials there hope for an agreement on its construction soon.
Chinese Premier Wen Jiabao will visit Moscow next week to hold talks with Russian Prime Minister Vladimir Putin.
Earlier this week, Jiabao said he expected the two sides would reach a "breakthrough" in talks on oil, natural gas and nuclear energy cooperation.
In particular, CNPC officials hope that the two leaders will sign an agreement on construction of the ESPO pipeline spur.
"The corporation expects the signing of a specific commercial document on building the ESPO Chinese extension during the Moscow visit of Chinese State Council Premier Wen Jiabao this October," a CNPC official said (OGJ Online, Oct. 17, 2008).
China has jockeyed with Japan for access to oil from the ESPO pipeline, which is designed to link East Siberian oil fields to Kozmino Bay on Russia's Pacific coast with a total length of more than 4,700 km.
That rivalry was underlined earlier this week when, following a visit to Japan by Russian leaders, the two countries agreed to cooperate on a variety of oil and gas projects.
In particular, the two sides hailed the start of joint exploration for oil in eastern Siberia, which they said would help to drive the ESPO line (OGJ Online, Oct. 21, 2008).
Contact Eric Watkins at [email protected].