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Kazakhstan-China Oil Pipeline Operational
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Crude oil from Kazakhstan poured into a petroleum tank in Alataw Pass in Northwest China's Xinjiang Uygur Autonomous Region at 6:45 PM Tuesday through a cross-border pipeline, marking the beginning of the commercial operation of China's first direct oil import pipeline.


Experts say the move will help enhance China's oil supply and provide an ideal outlet for Kazakhstan's oil exports.


Currently, the oil flux is only around 120 cubic meters per hour due to a valve failure in Kazakhstan, Zhu Minjie, a customs officer at the Alataw Pass told Xinhua News Agency.


It will take 15 days to fill up the 50,000-cubic-meter oil tank before the oil is piped to Dushanzi in Karamay, where China's largest oil refinery plant is located. The plant will be operational in 2008 and is designed to produce 5.5 million tons of refined oil a year, Zhu said.


The 960-km pipeline was jointly developed by China National Petroleum Corporation (CNPC) and Kazakh state energy company, Kazmunaigaz. It was constructed to transmit 20 million tons of oil a year, equivalent to 15 percent of China's total crude oil imports in 2005.


The first phase of the pipeline will transmit 10 million tons of oil a year, and that figure should double when the entire project is completed in 2011. The total length of the pipeline would then be about 3,000 kilometers.


China has set up an oil meterage station at the Alataw Pass, from where the crude oil from Kazakhstan enters China.


Industry insiders say construction of the oil pipeline is a win-win strategy for both countries as it will hopefully ease China's energy dearth and provide an ideal destination market for Kazakhstan's rich oil resources.


It has provided a direct link between Kazakhstan's rich oil resources and China's robust oil consumer market, said Yin Juntai, deputy general-manager of China Petroleum Exploration and Development Company.


Kazakhstan's crude oil output topped 50 million tons in 2002 (this is the most recent data available). About 70 percent of its oil is exported. With huge reserves in the Caspian Sea, insiders say the country's oil output will top 100 million tons by 2015.


The new oil shipping route will link Chinese consumers with the oil fields of the Caspian Sea, as well as alleviate China's excessive reliance on the Straits of Malacca, a traditional route for 80 percent of China's imported oil, Yin added.


Last year, China's crude oil import totaled 127 million tons, about 40 percent of its total consumption. About a half of China's oil import came from the Middle East and only 1.3 million tons was imported from Kazakhstan, via the Alataw Pass, in 2005. Insiders predict that the figure will climb to 4.75 million tons this year and to around 8 million tons in 2007.


China and Kazakhstan started energy cooperation in 1997, marked by an intergovernmental agreement covering diverse means of collaboration in oil and gas fields, including an oil pipeline between western Kazakhstan and China's Xinjiang.


The transnational pipeline, extending 962.2 km from Atasu in Kazakhstan to the Alataw Pass of Xinjiang, was completed in November 2005 at the cost of US$700 million. China has also completed laying a 252-km oil pipeline from the Alataw Pass to Dushanzi.


China produced 182 million tons of crude oil in 2005, a figure experts say will climb up to 195 million tons by the end of 2010.


By then, the country's production demand and consumption will be hovering around 330 million tons and 350 million tons respectively, said Pan Derun, deputy chairman of the China.


(Xinhua News Agency July 12, 2006)

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