| According to
the report published in the Russian newspaper
"Information" on Dec. 9, 2002, President
Putin presided over the discussion about the Far
East economic issues at the Conference of the
Russian Federal Security Committee in late November.
The conference tentatively decided to change the
route of the oil transmission pipeline from Angarsk
of Russia to Daqing of China.
The terminal station of the pipeline would be
changed to Vladivostok or the other place in the
Far East of Russia. Relevant companies and government
departments are evaluating the economic interests
and political consequences of the change.
The "Information" points out that many
experts engaged in foreign economy and trade activities
are surprised at the decision because Putin specially
discussed the construction of the Russia-China
oil/gas transmission pipeline during his visit
to China in December 2002.
The developments of the situation are very subtle:
As the energy cooperation between China and Russia
is of great significance, Chinese reporters have
interviewed some experts and scholars and the
overall feeling is that the developments of the
situation are very subtle. Opinions of experts
are widely different except on the basic agreement
that Russia has no capability at all to construct
two pipelines at the same time.
Those who support the "Far East Scheme"
think that the change can bring a chance to the
Far East economy and also expand the oil export
ability of Russia and promote the diversification
of energy trade. Besides economic considerations,
some people also think that it is more in the
interest of the national security of Russia. They
have the concern that the construction of an oil
transmission pipeline to Daqing would cause Russia
to lose powers in price and supply amount.
Those who are against the change of the pipeline
route mainly have the following reasons: First,
the pipeline from Angarsk to Daqing has a total
length of 2 400 kin and 800 km of the total is
inside China. With active coordination from the
Chinese side, funds for pipeline construction
can be ensured. The total pipeline length in the
"Far East Scheme" reaches over 4 000
km. Such huge funds can hardly be raised. Second,
it is still uncertain how much the oil output
in East Siberia will increase. If the oil supply
amount can not meet the pipeline design capacity,
there will be huge losses. Third, China, Japan
and Korea have made no promises at all to import
oil from Far East ports with oil tankers.
It does not conform to international practice
to construct oil transmission pipelines before
fixing the supply amount and the price with buyers.
Fourth, the change of the pipeline route will
cause Russia to lose China as a stable oil importer
and also produce an extremely negative impact
on strategic coordination partnership between
China and Russia.
Why did the dispute over the two pipeline routes
happen? Some experts think that the root cause
is the difference in interests between petroleum
companies and pipeline transmission companies
in Russia. Yukos Petroleum Company, the second
biggest petroleum company, attaches importance
to the Chinese market whereas Russian Pipeline
Transmission Company hopes to use the chance to
get more jobs. Both companies have considerable
influence on the government and opinions inside
the government therefore also differ. Some other
experts think that Russia is the sponsor of the
Angarsk-Daqing pipeline project and considering
its own interests it is not quite possible to
totally give
up this project.
China hopes that Russia can make an early decision:
China and Russia have been active in strengthening
economic ties in the past two years. Energy cooperation
can be said to be one of the most important items
in the economic cooperation between the two countries.
The pipeline project is also the biggest project
planned by the two sides. So, the information
and the attitude of relevant people disclosed
by the "Information" can not but arouse
the concern of the Chinese side.
It happens that the China-Russia oil/gas cooperation
leading group headed by a deputy general manager
of China National Petroleum Corporation is visiting
Moscow these days. On Dec. 17, 2002 reporters
had an interview with Mr. He Lianzhong, member
of the leading group, Deputy Director of the Foreign
Capital Department of the State Development Planning
Commission and Director of the Secretariat of
the Energy Cooperation Sub-Committee to the Regular
Meeting Committee of Chinese and Russian Government
Leaders. Mr. He says that the pipeline project
is the focus in the energy cooperation between
China and Russia.
In nearly 4 years China and Russia have put a
lot of human, material and financial resources
in the evaluation of project feasibility study.
The two sides once had different opinions on pipeline
route, cooperation form, oil supply amount and
pricing formula, but breakthroughs have been made
after repeated consultations.
When Chairman Jiang Zeming visited Russia in summer
in 2001, China National Petroleum Corporation
signed a framework agreement on the feasibility
study of the pipeline project with Yukos Petroleum
Company and Russian Pipeline Transmission Company.
When premiers of China and Russia had the regular
meeting in Sankt Peterburg in September 2002,
the 3 companies signed a new agreement. Chairman
Jiang Zeming and President Putin signed a joint
statement in Beijing on Dec. 2. The document points
out that in view of the great significance the
energy cooperation has to both sides, the heads
of the two countries think that ensuring the on-time
implementation of China-Russia oil] gas pipeline
cooperation project and the coordination of prospective
energy projects is of utmost importance to long-term
stable oil/gas supply.
Relevant companies of China and Russia have submitted
feasibility study reports to their respective
government. In early December 2002 the Chinese
Government announced that it had approved the
report submitted by the Chinese side and hoped
that Russia could approve the report submitted
by the Russian side as soon as possible, start
the stage of initial design and launch the pipeline
construction in 2004. The visit to Russia by the
China-Russia oil! Gas cooperation leading group
this time is also intended to promote the work
on the Russian side.
Energy cooperation between China and Russia meets
challenges:
The amount of oil exported by Russia to China
was only 1.76 million tons in 2001, accounting
for 3% of the total import amount in China. After
the completion of the oil transmission pipeline
from Russia to China, the amount of oil exported
by Russia to China will reach 20-30 million tons
a year from 2010. China has always regarded Russia
as a long-term and potential energy cooperation
partner. In case the terminal station of the oil
transmission pipeline is changed to a place inside
Russia, the degree of trust in the economic and
trade cooperation between China and Russia would
be somewhat reduced. The strategy of oil import
diversification in China will however have no
change. According to the analysis made by experts,
should such a situation happen China would possibly
continue to increase the oil import from the Middle
East and at the same time the oil import from
the Middle Asia would also be intensified?
According to the information reporters have got,
one week after it was proposed to change the route
of the oil transmission pipeline at the Conference
of the Russian Federal Security Committee, Russian
Duma passed a bill on Dec. 15, 2002 to oppose
the sales of shares to foreign oil companies by
the eighth biggest petroleum company in Russia
On Dec. 16, 2002 China National Petroleum Corporation
quitted the competition for the acquisition.
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