Chinese President Hu Jintao recently visited Russia and Kazakhstan aiming to secure access to greater supplies of crude oil and natural gas from his country’s two neighbors.
Russia’s proposed pipeline from Taishet in Eastern Siberia to Nakhodkha on the Pacific Coast was high on Hu’s agenda while in Moscow.
Construction of the first section of the line-from Taishet in Eastern Siberia to Skovordino near the Chinese border-is scheduled to begin in 2008 (OGJ Online, Apr. 27, 2005).
Ahead of Hu’s visit, Deputy Chinese Foreign Minister Li Huei said, “The leaders of the two countries have already reached an agreement in principle for the construction of an oil pipeline from the Russian Federation, and we hope for its realization as soon as possible.”
The pipeline has been a source of contention between China and Japan for more than a year, with each side lobbying Moscow hard to gain priority over its routing and destination (OGJ Online, Jan. 17, 2005).
Although Russia seemed to have opted for a solution favorable to Japan, it evidently has reignited the debate by proposing construction of the first section to Skovorodino and leaving open when, if ever, it will undertake the second section to Nakhodkha.
Russian officials have long emphasized the need for development of Siberia’s oil reserves as part of the pipeline project, suggesting that investment there will result in a favorable decision regarding the length and terminus of the pipeline.
Hu emphasized his interest in the region by visiting the city of Novosibirsk on July 2 to meet with representatives of the federal region of Siberia.
Hu’s job may be easier in Kazakhstan, where state-owned China National Petroleum Corp. already owns 75% of CNPC-Aktobemunaigaz, which extracts crude oil in the country’s northwestern region.
China, which has secured an oil pipeline agreement for delivery of as much as 20 million tonnes/year of crude oil beginning this year, is also seeking agreement from Kazakhstan for the construction of a natural gas pipeline.
But Hu’s visit could have been aimed primarily at lobbying the Kazakh government to help CNPC with the purchase of Petrokazakhstan Inc., a Calgary-based oil company working in central Asia, which recently announced it has been approached for a possible takeover or merger.
China reportedly is anxious to secure Petrokazakhstan amid suggestions that a bidding war may be in the offing due to widespread interest from other firms, including OAO Lukoil of Russia and India’s Oil & Natural Gas Corp. Other potential buyers reportedly include Eni SPA and Chevron Corp.
In March, PetroKazakhstan targeted a 12.5% production increase to 170,000 b/d in Kazakhstan in 2005, assuming timely receipt of regulatory approvals and the absence of marketing constraints.
The company’s total reserves climbed 11% during the year to 549.8 million boe, 71% of which is proved. Oil reserves rose 2.4% to 502.9 million bbl, replacing 123% of production (OGJ Online, Mar. 4, 2005). ✦
