Sino-Russian Oil Pipeline Officially Begins Operations

The oil pipeline linking the Chinese city of Daqing with the Russian city of Skovorodino officially began operating over the weekend with roughly 46,000 tons of crude oil flowing into China since Saturday, an official source told Xinhua news agency.

The pipeline, the result of a joint undertaking by PetroChina and Rosneft—respectively China’s largest producer of oil and gas and Russia’s largest oil company—is part of a Russian effort to broaden its market access, and a sustained Chinese aim of assuring its energy security.

The pipeline is expected to transport 15 million tons of crude oil per year, with a 30 million ton per year benchmark set for the near future. China consumed more than 388 million tons of crude oil in 2009, according to official statistics.

In the past, Russia and other oil exporters have tended to focus on satiating European and American demand for oil and energy goods. But with China’s rise, Russia, along with OPEC signatories, seems to be looking eastward. Analysts note that the strategic significance of the now fully functional pipeline is huge.

“Now, Russia’s oil infrastructure is pointing east — and its gas infrastructure will also soon be pointing east, as well as west,” Liam Halligan of Prosperity Capital told CNN News. “Russia can play one side off the other. Russia can command higher prices. Russia can expand its hydrocarbon exports.”

Russia is the world’s biggest oil producer, and China, after having surpassed the United States in 2010 for the title, is now the world’s largest consumer of energy. 2010 also saw China emerge as the biggest importer of oil from Saudi Arabia—also a title that was long held by the United States.

China’s appetite for energy has already started shaping political dynamics across the globe. China and other developing nations’ imports of energy resources have driven up the price of raw commodities. In energy-rich places such as Sudan, where Western companies have left under international pressure, Chinese energy companies have entered cheerfully. And in an impressive display of power, China unveiled plans to build 1,000 gigawatts of new power-generation capacity over the next 15 years, an amount roughly equivalent to the current total electricity-generation capacity in the United States, according to reports in the Wall Street Journal.

As Yao Wei, general manager of the Pipeline Branch of PetroChina, pushed the button to officially start the flow of oil, he proclaimed, “the operation of the China-Russia crude oil pipeline is the start of a new phase in China-Russia energy cooperation.”

And yet, it remains an expected step forward as China moves to secure its supply of energy from around the world.

A second stage of construction will be finished by 2014, adding an additional 4,700 kilometers to the pipeline. The project, in part financed by Chinese loans, will amount to US$ 25 billion in total when completed.

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