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Does Sun Rise in the East?

Russian oil expansion to China is the decided question

Russian oilmen have found an equivalent to their “great and bright dream” about hydrocarbon supplies to the US. The US is far, the transportation costs much, while US businessmen do not hasten to sign contracts and make investments in Russian industry.

While dynamically developing China is at a stone’s throw. And Russia’s cheap oil and gas are needed there. Moreover, it is very suitable to export hydrocarbon from there to other countries of South East Asia. And everything seems to go well. The Chinese are welcoming this idea. Other Asiatic also wait for Russian oil. And the main thing is that soon Chinese oil industry will be liberalized.
 
The Chinese government decided to approve technical and economical substantiation of the project to build oil pipe line from Russia to China (Angarsk-Datsin) and to permit to realize it by the end of 2002. At least, Russian Ministry of Economical and Industrial Development was informed so. While the oil company Yukos (the main Russian investor of the project) said about next December as about the possible date of the contract signing.

In September, Russian deputy minister of energy Vladimir Milov said to Russian mass media that the project of Angarsk-Datsin oil pipeline would be, beyond doubt, realized fist of all. In comparison with all other projects, this one is the most prepared, the deputy minister stated. And it is understandable. In the project, technical details are worked out well and the financing scheme is clear. At least, it is clear who pays.

As the first stage of the project, the pipeline will link the city of Irkutsk with north-eastern China, while afterwards it will reach Chinese eastern harbours. From there, Russian oil will be without difficulty exported to other countries of South East Asia, which now are very interested in the building.

As expected, already in 2005, the pipeline will be put into effect in experimental regime. Yukos intends to invest in the 1500-km-long Russian part of the pipeline 1.5 billion dollars, while PetroChina will invest in the 760-km-long Chinese part about 500 million dollars. By 2005, the transportation volume will make 20 million tons a year, while since 2010, it should increase till 30 million tons.

Till now, oil co-operation between Russian and China had a state character. There are three state oil companies in China: Chinese National Oil and Gas Company, SINOPEC and National Oil Off-Shore Company. Although the first company’s 4 percent of share belong to British Petroleum, while SINOPEC co-operates with Shell and ExxonMobil, foreign capital still could not develop in China.

Though, next year, great changes expect Chinese oil industry. In 2003, Chinese authorities will permit foreigners to organize joint petroleum refining firms, in 2004, they will be permitted to have over 50 percent of share in such firms, while since 2005, foreigners will be allowed to fully control petroleum refining. So Russian oligarchs cannot miss such an opportunity.
 
Yukos, Transportneft and Stroytransgaz have already started to take root in China. They participated in recent international oil exhibition, carried some non-official talks. However, as for official talks, nothing was carried out. Something was said by Sibneft company about possible expansion of Chinse oil market, though they at once fell into silence. It is not the time.

Everything it clear with Chinese petroleum refining industry. But the Chinese hardly can get without foreign partners in their own oil extraction. While the growing economy demands more and more oil. This year, China had to buy 70 million tons oil for its own needs. Experts are sure, by 2005, it will be necessary to buy already 100 million tons. In other words, oil requirement grows by 5 percent, while only 1 percent of the 5 could be satisfied with national efforts.

Yukos company is convinced Russina oilmen cannot afford to them to miss this opportunity. If that are not Russians, who will come to China, than the place will be occupied by somebody else. According to Yukos, only British Petroleum invests in China 4.5 billion dollars. And others?

On the threshold of the Yukos rush to the East, the company considers different variants of oil export to China. For example, oil supply by the railway through Mongolia. This year, Chinese National Oil and Gas company will supplied, through this way, with 750,000-800,000 tons of oil, while SINOPEC –  with 800,000-900,000 tons. In 2005, though this way, 3 billion tons oil will be supplied from Russia. The oil is supplied now to Shitszyachzhuan Petroleum Refining Work. At the same time, Yukos seems not to intend to participate in the oil industry privatization. Of course, if Chinese comrades do not ask the company about it.

According to the experts, the Russian oil companies’ methods in China are “tracing” methods of the “Iraqi strategy.” Though, in contrast to Iraq, where Russians hardly will get something because of the US ambitions, in China, western oil companies so far do not expect any danger from Russian potential competitors and this is why probably they do not make efforts to influence the events. So, Russian oil capital scouring about the world with the bag of oil dollars looking for some profit seems to have chances to really get registered in China.

Dmitry Slobodyanoyuk
PRAVDA.Ru

Translated by Vera Solovieva

The United States' Head of Diplomacy, or Secretary of State, is an anachronistic, incompetent, meddling, intrusive, insolent and arrogant, rude individual, a brash, foul-mouthed upstart, a conceited, self-important guttersnipe and an insult to the international community, as fit for the job as a pedophile janitor in a grade school.

Tillerson must go!