CRUDE OIL from Kazakhstan began flowing into China recently through the newly-completed pipeline, seen as a significant step in Beijing’s efforts to reduce its reliance on Middle East supplies amid soaring demand. Kazakh oil arrived at a Chinese pump station near the Alataw Pass in the far western Xinjiang region about 30 hours after pumping began, China’s official Xinhua News Agency said.
The 962-km pipeline from Atasu in Kazakhstan was completed late last year at cost of $700m, Xinhua said. The two countries split the construction costs. The pipeline is designed to carry 20m tons/yr of oil, equivalent to 140m brl, and this year it will nearly quadruple imports of Kazakh crude transported via the pass to 4.75m tons (33.25m brl) from last years total of 1.3m tons (9.1m brl).
Most of China’s oil imports come from the Persian Gulf and Africa, the tankers transporting which have to pass through the Strait of Malacca where they are vulnerable to piracy or other disruptions. Beijing is also negotiating with Russia over a proposed pipeline to deliver Siberian oil; this line, which could be finished by 2008, would carry about 380,000brl/d.
China’s current oil imports are estimated at between 2.5m and 3m brl/d, most of which comes from the Middle East; this amount is expected to rise to 5 to 10m brl by 2010. The country has also been busily securing assets abroad, and its largest oil company, China National Petroleum Corp. took over Canada-based PetroKazakhstan last year for $4.2bn in China’s biggest foreign oil industry acquisition ever. The company has all of its assets in Kazakhstan which, according to the US-Kazakhstan Business Association, has potential oil reserves as high as 110bn brl.