21-09-04
When Chinese Premier Wen Jiabao visits Moscow, all eyes will be on whether he can persuade his Russian counterpart Mikhail Fradkov to stick to an original agreement to build a pipeline to transport $ 150 bn (S$ 254 bn) worth of oil from Siberia to China. That agreement was signed by Chinese President Hu Jintao and Russia President Vladimir Putin in May last year.
The last time a Russian prime minister came to Beijing, in September last year,
the then premier Mikhail Kasyanov told Mr Wen that the pipeline project had been
postponed so as to conduct environmental studies. Since then, Japan has
reportedly swooped in under China's nose with $ 7 bn in financing to persuade
Russia to build a link to the Pacific instead of the $ 2.8 bn route to China
backed by Yukos Oil, Russia's top crude exporter.
Russia is expected to make a final decision by year-end. China's Assistant Foreign Minister Li Hui admitted that China had no inkling on which route its northern neighbour preferred.
“As far as we are concerned, no matter which route is preferred by the Russian
side, we hope a line linking Russia with China will be constructed,” said Mr
Li.
China's rationale for wanting to build the oil pipeline ending in Daqing is
simple: The world's seventh-largest economy needs more energy to fuel its torrid
pace of economic growth. It already accounts for 30 % of the increase in oil
demand growth this year and next year. Over the next three decades, China will
account for 20 % of the world's incremental energy demand, and 16 % of the rise
in oil demand alone, says the International Energy Agency.
Most of China's oil imports enter the country via railways. But the risk of rail transportation was highlighted when Yukos partly suspended its deliveries to China National Petroleum Corp (CNPC) this month because it could not pay its railway bills and export duties.
Yukos was forced to cut production and exports after bailiffs froze its bank
accounts as part of efforts to recover more than $ 7 bn in back taxes for
2000-2001. However, Yukos is honouring its oil export commitment to another
major Chinese oil company, Sinopec, to supply an expected 750,000 tons of oil by
the end of the year.
“Russian exports for Sinopec are more critical than for the CNPC. Therefore,
we think it would be correct to ensure uninterrupted supplies for Sinopec,” a
Yukos spokesman was quoted as saying.
CNPC vice-president Su Shulin said it expected crude supplies from Yukos to continue as normal this month.
“The supply has not been suspended. It's being continued at 380,000 tons for
this month,” he said at the sidelines of a petroleum and petrochemical summit.
Oil traders said it would take weeks before rail imports ground to a halt as
railcars in transit take time to arrive.
Source: Straits Times