Russian leaders continue to play political games with their country's oil and gas, now using a new pipeline to China as a means of rattling the oil weapon.
That came last week when OAO Rosneft said it would reduce oil exports this year through the export terminal at Kozmino on Russia's Pacific Coast.
"We will decrease [oil supplies] in 2010, said Sergei Andronov, head of Rosneft's export department. "We plan to supply 7-7.5 million tonnes of oil this year," he said.
That's a reduction of 50% or so over the 15 million tpy of oil currently being delivered to Kozmino for export to markets in Asia Pacific, and—Oops!—it's due to a pending increase in supplies to China.
That decrease to Asia Pacific (read: Japan) has come because of the launch of the new spur to China from the East Siberia Pacific Ocean pipeline, which runs from Taishet in eastern Siberia to Skovorodino.
Pipeline spur
The new 67-km spur, which will ultimately run 1,000 km from Skovorodino to China's northeastern city of Daqing, was launched last week by Russia's Prime Minister Vladimir Putin, who hailed it as an entryway into "new" markets.
"The implementation of this project is a crucial task for Russia and our Chinese friends," said Putin. "It means stabilization of supplies and energy balance for China and for us it creates entry to new challenging markets."
Putin went on to describe the pipeline development as part of a wider program of cooperation between his country and China, saying it is a "multidimensional project" that strengthens energy collaboration between the two countries.
"Chinese partners are taking part in oil extraction in the Russian Federation, while Russian enterprises are shareholders in oil refining enterprises and distribution networks in China," Putin said.
Tangible competition
The Russian leader also used the ESPO project to have a dig at Europe in addition to Japan, saying the new route already represented "a tangible competition" to the European route.
"Until now, the main deliveries were made to Europe, to our European partners. This means that 120-130 million tonnes of Russian oil flows to Europe," Putin said, suggesting that such halcyon days are coming to a close.
"A small quantity has been delivered so far to the Asia-Pacific region," Putin acknowledged, but said 30 million tonnes of oil will be delivered with the launching of the line to China, and a further 50 million tonnes when the line is eventually expanded all the way to Kozmino.
Underline the word 'eventually.' That sort of tease is part of Russia's effort to use what Putin grandly calls its "strategic supplies" of oil and gas.
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