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Russia’s Oil Exports to China Nearly Double With Opening Of New Pipeline

By Fuad Mukhtarli January 10, 2018

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Oil pipeline Russia-China

The second leg of the Russia-China crude oil pipeline came online on the first day of the New Year, raising annual exports of Russian crude oil to China from 15 million to 30 million tons per year.

The 940 km (584 mi) pipeline carries oil from Skovorodino, which lies near China’s northernmost border and in far eastern Russia, to Daqing city in China.

A line that runs from Mohe to Daqing was launched in 2011, having an annual capacity of 15 million tons. So far it has pumped 110 million tons of crude oil into China. In 2016, a second line was launched to meet China’s ever-growing demand for energy resources, as well as give a boost to China’s One Belt and One Road (OBOR) mega-transportation initiative. The commissioning of the new oil pipeline will markedly enhance China’s energy security, and build up the economic development of its northeastern provinces.

With increasing awareness of environmental concerns and a growing appetite for clean energy, China – the world’s largest energy consumer – has been determined to expand its network of oil and natural gas pipelines to secure stable supplies and clean up its coal-dominated energy mix.

China is planning to extend its pipeline networks to 169,000 km (105,011 mi) by 2020, which will include those supplying crude (32,000 km or 19,883 mi), refined oil (33,000 km or 20,505 mi) and natural gas (104,000 km or 64,622 mi) to its $21.2 trillion economy. The total length of the networks will rise to 240,000 km (149,129 mi) by 2025, according to a document released in July of last year by the National Development and Reform Commission and the National Energy Administration.

With the launch of the second line, Russia has become China's biggest exporter of crude oil. Apart from the two pipelines, China also imports a large amount of crude oil from Russia via freight trains.

China imports more than 60 per cent of its crude oil from other countries, and more reforms are needed to boost domestic production. Russia is to double its crude oil export capacity to China as a result of a new pipeline, cementing its position as the number one supplier of crude to its eastern neighbor. This boosts Russia’s lead over Angola and Saudi Arabia as Beijing's biggest supplier of crude oil. China is currently considered the number one importer of raw petroleum in the world.

For the ninth consecutive month, Russia remains the largest oil supplier to China. In November, Russia exported 5.12 million tons of oil to the Asian giant, an 11 percent increase in annual terms.

In 2016, China consumed about 560 million tons of crude oil, 65 percent of which was imported. Both oil consumption and the proportion imported are expected to rise, according to China National Petroleum Corporation, the largest oil producer and supplier of the country.

Both countries are intensifying cooperation in the natural gas sector as well, through the China-Russia East-Route Natural Gas Pipeline, which is expected to send up to 38 billion cubic meters of gas to China each year, beginning sometime later this year.