A 30-kilometer-cross-river oil pipeline will link railway lines between Heihe, a port city in northeast China's Heilongjiang Province, and Siberia's Blagoveshchensk in Russia.
The pipeline is China's first private oil pipeline that will import oil from Russia.
The two border cities are the closest, separated only by the Heilongjiang River in China and the Amur River in Russia.
"With the geological advantages, the pipeline we are building will be a speedy and convenient shortcut to transporting oil from Russia," said Tao Ran, general manager of the Heihe-based Xinghe Industries Development Co Ltd, the pipeline's Chinese operator.
Estimated to cost a total of about 520 million yuan (US$64 million), Xinghe Industries will invest 342.33 million yuan (US$43 million), and the Moscow-based Russian Lanta Oil Company will undertake the remaining 170 million yuan (US$21 million) in the project.
Construction will include a railway unloading field and oil transfer station in Blagoveshchensk as the inlet for the oil, four underwater pipelines across the Heilongjiang River, and another railway loading field and oil transfer station in Heihe.
Land reclamation for the railway facilities of the oil pipeline on the Chinese side is already complete, according to Tao.
The whole project is scheduled for completion in September next year, with an initial annual transporting capacity of 3 million tons of oil. It might reach its full capacity of 5 million tons by 2008.
Amidst lingering Sino-Russian oil pipeline issues, the construction of this pipeline might be a good way to relieve the oil transportation bottlenecks between the two countries, experts say.
At present, China mainly relies on railways, linking the land port of Manzhouli in northeast China and the port of Erenhot in Inner Mongolia, to import crude oil from Russia.
"The pipeline would definitely play a considerable role in relieving saturation at the two ports," Song Kui, director of the Northeast Asian Research Center in Harbin, capital of Heilongjiang Province, told China Daily.
China now imports about 10 million tons of crude oil from Russia each year. That figure is expected to reach 15 million tons in 2006, according to an agreement signed between the two countries last October.
An Zhaozhen, a researcher from the Russian Research Center of Heilongjiang, welcomed the establishment of the pipeline as a "good move" for private companies in Heilongjiang to tap into the Russian markets.
"Oil by-products will be mainly provided to the users in Heilongjiang Province, so this pipeline is more of local significance," Song said.
Earlier this year, the province called for more privately owned companies to venture further into Russian markets, An said.
But Song warned that Russia's new regulation on mines and resources could create more barriers for Chinese companies looking to enter this field.
"The new regulation rules out the possibility for foreign companies to exploit Russian mineral resources," he said.
"Chinese companies would have to register another company in Russia in order to do so," Song added.
Xinghe and Russian Lanta have established a joint venture in Russia.
(China Daily September 28, 2005)
