Business / Industries

China-Russia oil pipeline fuels trade

By ZHANG YU/LYU CHANG (China Daily) Updated: 2016-08-19 08:57

China-Russia oil pipeline fuels trade

Two China National Petroleum Corp employees collect crude oil transported from Russia at the valve chamber in Daqing, Heilongjiang province.GUO JUNFENG/FOR CHINA DAILY

Huge capacity of link to enhance energy security, cut costs

A new China-Russia oil pipeline will help guarantee China's oil consumption and, cut its transportation costs, said Gao Jian, an oil analyst at commodities consultancy Sublime China Information Co Ltd.

Compared with other countries, Russia has oil of quite good quality, and its location near China makes it competitive in exporting oil to China, Gao said, adding that Russia will certainly become China's largest exporter of oil in the near future.

The European economic situation made Russia shift its oil export destinations to the Asia-Pacific region, while China, as one of the world's largest oil consumers, has the need to import oil from neighboring countries, according to Gao.

Construction of the second China-Russia crude oil pipeline started recently in northeastern China's Heilongjiang province, a move that expands the capability for oil transportation from Russia to China.

The pipeline, traversing the China-Russia border, is 940 km in length and 813 mm in diameter, with a capacity to transport 15 million tons of crude oil annually, according to China National Petroleum Corporation.

The Chinese section of the pipeline starts from the border city of Mohe in Heilongjiang, runs southward through the Inner Mongolia autonomous region and ends at Daqing in Heilongjiang.

The pipeline is expected to be put into operation at the beginning of 2018.

It will run parallel to an existing pipeline-the first China-Russia crude oil pipeline that was put into use in 2011, which can also transport 15 million tons of oil each year.

According to the CNPC Economics & Technology Research Institute, China imported 328 million tons of oil last year.

In 2015, Russia exported 41.04 million tons of crude oil to China, making China the country's largest oil importer, Russian media reported.

That means more than 12.5 percent of crude oil China imported last year was from Russia.

China and Russia signed a cooperation agreement on expanding bilateral trade in crude oil in 2013.

Following the agreement, CNPC signed a trade contract with Rosneft, Russia's largest oil producer, to expand the supply of oil for China.

Building a new pipeline is the main action under the contract.

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