The China-Russia oil pipeline project, the "Angarsk-Daqing Line", which has experienced twists and turns, has finally been decided. It is predicted that if no special case occurs, this 2,400 km-long transnational oil pipeline, starting from Russia's Angarsk to China's Daqing, is expected to start construction at the end of the year.

1.All, except east wind, is ready for the "Angarsk-Daqing Line"

With the all-out support of the top leaders of China and Russia and through the energetic efforts made by the Chinese and Russian governments, the China National Petroleum Corporation and the Russian Yukos Oil Company and Russian Pipeline Transport Transneft signed a principled agreement in 2001, deciding to jointly lay the "Angarsk-Daqing Pipeline". In December 2002, related feasibility study work of the two sides drew to an end and would switch to the designing stage upon approval made by the two governments and would start construction early this year. The joint statement signed by President Jiang Zemin and the visiting Russian President Vladimir Putin in early December 2002 declared: Considering the important significance of energy cooperation for the two sides, heads of state of the two countries held that guaranteeing the scheduled implementation of the Sino-Russian crude oil pipeline and natural gas pipeline cooperation project as contained in the agreement, and the coordinated implementation of promising energy projects is of vital importance for ensuring stable, long-term oil/gas supply.

2.Russia sets forth "Far East Plan"

It is unexpected that new issues suddenly cropped up in relation to this oil pipeline of major political and economic significance.

Just as relevant Chinese and Russian departments were busy making first-phase preparation for the China-Russian oil pipeline, the Russian Pipeline Transport Transneft which was responsible for the China-Russian pipeline technological and economic feasibility studies unexpectedly announced: giving up the plan for a China-Russian oil pipeline and instead building an oil pipeline from the eastern Siberia to the Russian Pacific port, Nakhodka (or "Far East Plan" for short).

Regarding this, Russian media revealed some inside news. A signed article published on the front page of Izvestia, an influential Russian newspaper, said: in late November 2002, the Russian Federal Security Committee specially held a conference to discus Far Eastern economic problems, the conference initially decided to change the oil pipeline leading from Russia's Angarsk to China's Daqing, the terminal of this oil pipeline would be reset at Russia's Far Eastern Vladivostok (Haishenwai) or Nkhodka. Relevant companies and government departments were examining the economic benefit and political consequence of such a change.

3.Japan casts an eye on Russia's oil

Why was there such a sudden change in the "Angarsk-Daqing" project? It turned out that Japan has also taken aim at Russia's oil and has involved itself in competition. It is disclosed that Japan's Economic and Industrial Minister Takeo Hiranuma submitted his personal letter concerning the exploitation of Russia's eastern Siberian oil field to Russian Energy Minister Igor Yusufov and Economic Minister Sergey Grigoriev, the letter stated that Japan intended to participate in this project (Far East Plan), including the funds involved. Thereafter, Japanese Prime Minister Junichiro Koizumi paid special trip to Russia during which he discussed the matter with Vladimir Putin. Japan hinted that if Moscow agreed to build this 4,000 km-long oil pipeline at an estimated cost of US$5 billion, Japan would guarantee to purchase 50 million tons of oil per year and was ready to put in huge sum of money to develop Siberian energy.

4.Two different views make no concession to each other

There were two kinds of opinions in Russia after the Russian Pipeline Transport Transneft put forward the "Far East Plan". Those supporting the "Far East Plan" said doing so could bring vitality to the Far Eastern economy and could expand Russia's oil export capacity and enhance the diversification of energy trade. Some even drew a picture showing the beautiful future: Russian oil will be unceasingly channeled into Nakhodka and other ports through the pipeline, which will reach 50 million tons per year,. Oil tanks of China, Japan and the Republic of Korea (ROK) will vie with each other to sail into the port and carry off barrels of "black gold" one after another, and leave behind huge sums of US dollars. Others even asserted that doing so was in the best interest of Russia's national security. Experts supporting the "Angarsk-Daqing Plan" more objectively pointed out the problem: First, the oil reserves of Russia's Far Eastern region cannot guarantee the annual export of 50 million tons. Additionally, the "Far East Plan" involves a long pipeline and a consumption of huge money, needing US$5 billion.; although Japan expressed its willingness to provide loans, it required the Russian government to provide the guarantee.

For a while, exponents of the two views made no concession to each other and engaged in endless disputes. At the end of last year, the Russian Pipeline Transport Transneft and the Russian Yukos Oil Company almost simultaneously sent their respective oil pipeline technological and economic feasibility plans to the desk of the Russian government office, the Russian government must make a choice between the two.

5.The government presents a compromise plan

On February 7, at the conference held by the Russian Energy Minister Igor Yusulov, representatives of various Russian parties produced a compromise plan: which integrates the two pipelines, the "Angarsk-Daqing Line" and the "Far Eastern Plan", into one line and, on the Angarsk-Nkhodka trunk line, build a feeder line leading to China's Daqing, the pipeline leading to China will start construction first. This plan is regarded as "in the best national interest of (Russia) and facilitating the development of eastern Siberia and the Far East as well as the comprehensive development of natural resources". On March 13, the Russian government adopted, in principle, the compromise plan that combined the "Far Eastern Line" and the "Angarsk-Daqing Line" into one line, meanwhile, it required the various Russian departments and quarters to carry out meticulous study of the oil pipeline plan, a decision would be worked out in early May.

6."Build the Angarsk-Daqing Line" first

Recently, Russian Prime Minister Kasyanov reaffirmed the plan for the integration of two lines into one and first building the Angarsk-Daqing Line, this indicates the final decision on the oil export line of Russia's Far Eastern region. It is predicted that if no special case occurs, the transnational oil pipeline leading from Russia's Angarsk to Daqing of China will smoothly start construction at the end of this year.

Regarding this, the China National Petroleum Corporation and the Russian Central Asia Oil/Gas Industrial Project investigator indicate: "China has achieved success in the present cooperation, the Angarsk-Daqing Line, as the first-phase construction line, first guarantees China's needs, meanwhile, the first-phase construction also implies the indefinite prolongation of the second-phase construction, (the Far East Plan).

(People’s Daily May 24, 2003)