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Kazakh pipeline begins delivering oil to China

Aside from Kazakhstan (a Kazakh oil rig is pictured above), China has over the past few years signed deals in countries as far afield as Australia, Nigeria, Syria and Kenya in an effort to secure more oil.
by Karl Malakunas
Beijing (AFP) May 25, 2006
A pipeline from Kazakhstan capable of supplying China with nearly a sixth of its current annual oil imports began its first deliveries on Thursday, the official Xinhua news agency reported.

The 1,000-kilometre (620-mile) pipeline linking Atasu in the central Asian state of Kazakhstan to northwestern China's Xinjiang region began operations early Thursday morning, Xinhua said.

The 700-million-dollar pipeline has an annual delivery of capacity of 20 million tonnes, opening up an important fresh energy source for China which last year imported 130 million tonnes of oil.

China is the second biggest importer of oil behind the United States and has been scouring the world in recent years for more supplies to meet fast-rising demand that has accompanied the nation's staggering economic growth.

He Jun, a Beijing-based senior energy analyst at Anbound Consulting, said the project was immensely important to China because it was the nation's first source of piped oil from another country.

"It means a lot for Chinas oil safety," He said. "Twenty million tonnes is one-sixth to one-seventh of all of China's imports."

The pipeline is being seen as having added importance because it is the first part of a far bigger project to link Chinese consumers with the oil fields of the Caspian Sea.

Kazakhstan authorities said last year the extension should be complete by 2011. The total length of the pipeline would then be around 3,000 kilometres (1,850 miles).

Kazakh President Nursultan Nazarbayev officially launched the new pipeline in his nations' capital of Astana in December last year.

"This is an event of the utmost importance for economic and commercial relations between China and Kazakhstan," he said at the time.

The pipeline was jointly developed by the China National Petroleum Corporation (CNPC) and the Kazakh state energy company, Kazmunaigaz.

CNPC officials were not immediately available to comment on Thursday.

David Ernsberger, the Asian editorial director for commodities information service Platts, said the pipeline was very significant for China for a number of strategic reasons.

"China is trying very hard to wean itself off Middle Eastern crude oil supplies, that's a big priority for China right now," Ernsberger said.

"Although Iran and Saudi Arabia are important suppliers, that is more out of necessity for China than desire."

Ernsberger said the pipeline was also a timely boost for China as it continued to be frustrated by Russia's equivocation on a potential pipeline from Siberia.

Beijing has already made significant investments in Kazakhstan, whose proven resources of 24 billion barrels of oil are regarded as one of the most important potential sources of new crude supplies for world markets.

China's state-run CNPC paid more than four billion dollars for energy firm PetroKazakhstan from a Canadian company. PetroKazakhstan is likely to be a key supplier for the new pipeline.

Aside from Kazakhstan, China has over the past few years signed deals in countries as far afield as Australia, Nigeria, Syria and Kenya in an effort to secure more oil.

Source: Agence France-Presse

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