CHINA / National
China's oil pipeline dream came true
(China Daily/Xinhua/Agencies)
Updated: 2006-05-26 06:37
ALATAW PASS, Xinjiang: Crude oil from Kazakhstan began flowing into
Xinjiang in Northwest China Thursday, the first time a pipeline has been
used for imports.
Experts say the piped oil would increase supply, improve energy security
and provide an ideal outlet for Kazakhstan's exports.
A worker performs on a welding operation of the China-Kazakhstan oil
pipeline in this undated photo. The costs for the 960-kilometer pipeline
amounted to US$700 million and the designed capacity is to pipe 20
million tons of oil to China each year. [Xinhua]
The first-phase 962-kilometre pipeline which originates in Atasu,
Kazakhstan was completed late last year at an expenditure of US$700
million. The two countries split the construction costs.
The pipeline will pump 10 million tons of crude a year, the amount
doubling when the project is completed in 2011, linking Atyrau on the
Caspian Sea. The total length of the pipeline would then be around 3,000
kilometres.
The pipeline is designed to eventually carry 20 million tons annually,
equivalent to 140 million barrels.
"It means a lot for China's oil security," said He Jun, a Beijing-based
energy analyst at Anbound Consulting. "Twenty million tons are about
one-sixth all of China's imports."
China imported 127 million tons of crude last year, which made up about
40 per cent of total consumption.
Liu Hequn, a senior analyst at the planning institute of China National
Petroleum Corp, said the pipeline was also a timely boost for China at a
time when it is in talks with Russia for a proposed pipeline to deliver
Siberian oil to the northeast.
That line could be built by 2008 and carry about 19 million tons a year.
China and Russia are also in talks over a cross-border natural gas
pipeline which may run through Heilongjiang in the northeast or Xinjiang,
with an annual capacity of 30 billion cubic metres. Last year, China
consumed about 48 billion cubic metres of natural gas.
Currently, most of China's oil imports come from the Middle East and
Africa, a lengthy journey by sea and passing through the Strait of
Malacca which is vulnerable to piracy or other disruptions.
Industry insiders hailed the new pipeline as beneficial to both countries.
"It provides a direct link between Kazakhstan's rich oil resources and
China's robust market," said Yin Juntai, deputy general manager of China
Petroleum Exploration and Development Company.
The pipeline was jointly developed by China National Petroleum
Corporation (CNPC) and Kazmunaigaz, the Kazakh state energy company.
Kairgeldy Kabyldin, vice-president of Kazakhstan National Petroleum and
Natural Gas Company, called the pipeline a "new paradigm of co-operation."
China has completed laying a 252-kilometre oil pipeline from Alataw Pass
to Dushanzi where the refinery's capacity will be expanded to 10 million
tons a year by 2008.
With crude prices continuing to stay high on the international market,
the Chinese Government on Wednesday raised the prices of gasoline, diesel
and aviation fuel by 500 yuan (US$62.4) per ton, a 10-per-cent rise. It
was the ninth and the biggest price hike for refined oil products since
July 2003.
In the pipeline
Kazakhstan, which has huge reserves in the Caspian Sea, produced 50
million tons of crude oil in 2002 (the most recent data available). About
70 per cent of its oil is exported. The country's oil output is expected
to top 100 million tons by 2015.
China produced 182 million tons of crude oil in 2005, a figure expected
to reach 195 million tons by the end of 2010.
The pipeline will nearly quadruple imports of Kazakh crude to 4.75
million tons, or 33.25 million barrels, this year from 1.3 million tons,
or 9.1 million barrels, last year.
That amount will rise to about 8 million tons, or 56 million barrels, in
2007.
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