OAO Yukos Oil Co., Russia's second-largest oil company, signed
an agreement on Saturday with Russian Railways to more than double
the railway delivery of oil exported to China this year and
increase the amount fivefold by 2006.
The agreement came after negotiations on the proposed US$2.5
billion Sino-Russian oil pipeline bogged down.
The two Russian companies agreed to raise oil shipments by rail
to 6.4 million tons this year from 3 million tons last year,
according to Xinhua News Agency.
The amount is expected to increase to 8.5 million tons in 2005
and to 15 million tons by 2006. It will increase further from
2007.
Last month, China National Petroleum Corp. (CNPC), the nation's
largest oil producer, agreed to buy 10 million tons of oil annually
from Yukos starting from 2006 for seven years.
The oil will be delivered via the existing rail line linking
Russia's Zabaikalsk with the Manzhouli area in China.
Sinopec, China's second-largest oil company, is likely to buy
the remaining 5 million tons of Yukos oil. It would be shipped via
another railway linking the Russian territory to Erlianhaote in
Inner Mongolia.
Yukos exported about 3 million tons of oil to China last year,
accounting for 60 percent of Russia's crude exports to China.
Russian company executives said they will invest 40 billion
rubles (US$1.4 billion) to upgrade the railways and expand
transportation capacity to handle the oil.
The executives said that increasing oil exports by rail to China
will benefit both Yukos and Chinese oil companies while the Russian
government makes its final decision whether its crude oil pipeline
should end in China or Russia's East Pacific port in favor of
Japan.
China and Russia signed a nonbinding framework agreement last
March to build an oil pipeline, running from Angarsk in eastern
Siberia to Daqing in northeast China.
The trunkline would allow China to ship 700 million tons of
Russia's crude through the pipeline to China over the next 25
years. The deal, worth US$150 billion in total, would be the
largest-ever bilateral trade agreement between the two
countries.
The project took a knock after Japan offered a rival pipeline
that would bypass China and stretch to Russia's Far Eastern port of
Nakhodka.
The latest reports indicate that Russia is likely to build the
trunkline to Nakhodka, and build a branch line to Daqing as a
compromise.
(China Daily March 29, 2004)