[PEN-L:28643] Russia, China closer to $1.7 bn oil pipeline deal

["Ulhas Joglekar" <joglekarulhas@xxxxxxxxxxx>]

The Times of India

THURSDAY, JULY 25, 2002

Russia, China closer to $1.7 bn oil pipeline deal

REUTERS

MOSCOW: Russia and China moved a step closer on Thursday to building a
$1.7-billion pipeline to ship Siberian oil to northeast China by 2005, after
leading firms agreed several key terms.

China National Petroleum Corp (CNPC) and Russia's No. 2 oil producer YUKOS
agreed that CNPC could provide a loan to cover up to 50 per cent of the cost
of the Russian section of the pipeline, a source close to the talks told
Reuters.

The pipeline from Russia's Angarsk in eastern Siberia will stretch some
1,450 km to the border with China and run another 790 km to northeast China.
The Chinese section is to be fully financed by Chinese firms.

Russia's pipeline monopoly Transneft and YUKOS are leading the project,
which will see Russia export 20 million tonnes of oil a year (400,000
barrels per day) to China from 2005 to 2010, with volumes rising to 30
million tonnes a year from 2010-2030.

Forecasts for construction costs and tariffs are slated to be finalised by
the end of this month and a blueprint for the pipeline and its route should
be ready by July 2003.

"We also agreed that the Russian side could repay Chinese loans from an
investment tariff that Russian firms will have to pay when shipping crude
through the Russian section of the pipeline," the source said.

He said CNPC also said China was ready to extend guarantees beyond 2010, and
purchase of 30 million tonnes a year from 2010 to 2030.

China, a net crude importer since 1993, imports about 60 million tonnes a
year (1.2 million bpd), about a quarter of its consumption. Some 60 per cent
of imported crude comes from the Middle East and Beijing wants to diversify
supplies.

Russia, the world's second largest oil exporter, ships its crude mainly to
Europe, but is looking for new markets as its oil output booms for the
fourth consecutive year.

This year China agreed to import 1.8 million tonnes of crude directly from
Russia, most of which is shipped by rail by YUKOS. The source said the sides
had agreed that rail shipments would rise to 2.0 million tonnes in 2003, 2.5
million in 2004 and 3.0 million in 2005.

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