China-Russia Crude Oil Pipeline Begins Operations

China-Russia Crude Oil Pipeline Begins Operations
Associated Press / August 29, 2010

SHANGHAI (AP) -- Russia has opened its section of a crude oil pipeline from eastern Siberia to China, a major step in expanding energy cooperation between the neighboring powers.

The 1,000-kilometer (625-mile) pipeline will connect Russian oil fields with Daqing, a major oil production base in northeastern China.

''For China, this will help stabilize its energy supplies and security. For Russia, this offers a new market for exports to the Asia-Pacific region, especially dynamic and developing China,'' the state-run China National Petroleum Corp. quoted Russian Prime Minister Vladimir Putin as saying, in a statement issued Monday on its website.

Russia is the world's biggest energy producer and China is the world's largest energy consumer, overtaking the United States last year. Although Europe remains Russia's largest export market for gas and oil, both Beijing and Moscow have been seeking to diversify their energy sources and markets, despite a long history of mutual suspicion and tensions.

Speaking at the ceremony Sunday in the Russian city of Skovorodino marking the pipeline's opening, Putin said cooperation would not be limited to oil exports. Russia welcomes Chinese help in exploiting its abundant resources in the Far East and in expanding refining and marketing, he was quoted as saying.

The Chinese segment of the pipeline is still under construction but is expected to begin operations before the year's end, the statement said.

Eventually, the pipeline is to provide 30 million tons of oil a year to China, with exports to the Asia-Pacific region expanding to a total of 50 million tons a year, Putin was quoted as saying.

During a visit by Putin to Beijing late last year, Russia signed dozens of commercial pacts worth $3.5 billion and set the framework for a separate, multibillion-dollar agreement to build two natural gas pipelines to China from gas fields in Russia's Far East that would provide supplies almost matching China's current consumption.