On January 6, Russian President Vladimir Putin said that construction of the first stage of the Tayshet-Nakhodka oil pipeline will start this summer, and a branch line from the main pipeline to China's Daqing will be put into use first.

 

The first-stage pipeline, from Tayshet in central Siberia to Skovorodino 60 kilometers north of the border with northeast China, will be operational by November 8, 2008, with an annual oil transmission capacity of 30 million tons. Cost of construction is estimated at around US$6.5 billion.

 

China and Russia have had 12 years of marathon talks discussing the pipeline, according to a Beijing Morning Post report yesterday.

 

Originally, both sides agreed to bring oil from Angarsk in east Siberia to Daqing, with one-third of the pipeline to be built within the Chinese territory.

 

But plans changed when Japan stepped into the equation. At the end of 2002, Russia reportedly gave up the Angarsk-Daqing route, and decided to construct a new line from Angarsk to the port city of Nakhodka in the Sea of Japan.

 

While Sino-Russian negotiations reached an impasse, China made a breakthrough with its western neighbor Kazakhstan. A transnational oil project between them links Atasu in Kazakhstan to Alataw Pass in Xinjiang Uygur Autonomous Region.

 

The first phase of the 960 km pipeline, which joins the Alataw Pass-Dushanzi pipeline in northwestern Xinjiang, was completed last month with a designed annual oil transmission capacity of 10 million tons. Its second phase is expected to be finished in 2010, creating a delivery capacity of 20 million tons.

 

Seeing China gradually turning its attention to Central Asia, Russian oil companies who didn't want to lose the huge Chinese market had the jitters. In February 2003, then Russian Minister of Energy Igor Yusufov introduced a compromise solution to combine the two pipelines into one, while giving priority to the construction of a branch line to Daqing. This provided the embryonic form of the current Tayshet-Nakhodka route.

 

In September 2005, Putin said that economically speaking, building the China pipeline first was a more attractive option. By exporting oil to Daqing and then to the whole Asian-Pacific region, Russia could avoid relying too heavily on only a few customers.

 

Meanwhile, China also energetically promoted the oil project with Russia. Premier Wen Jiabao and Russian Prime Minister Mikhail Yefimovich Fradkov signed a communiqué at their 10th regular meeting in Beijing in November. The communiqué said the two countries believe that energy cooperation is "significantly important," and are supportive to Chinese and Russian companies for their work to lay out and build an oil pipeline from Russia to China.

 

The Russian government gave the green light to the 4,130 km Tayshet-Nakhodka pipeline project in December 2004. The total construction cost is estimated at between US$11.0 billion and US$16.2 billion. The annual capacity of the pipeline is likely to be 80 million tons.

 

(China.org.cn by Shao Da, January 12, 2006)