New MOU to double Russian crude supply to China

14 October 2009 08:48  [Source: ICIS news]

SHANGHAI (ICIS news)--Russia's crude oil supply to energy giant China National Petroleum Corporation (CNPC) will almost double to 30m tonnes/year based on a new agreement which expands on a previous “loans for oil” deal, a local government official and domestic media reports said on Wednesday.

In the recently inked Memorandum of Understanding (MOU), Russian oil company Rosneft will likely supply the additional oil to China’s new joint-venture refinery in Tianjin, northern China, an official from economic planning unit Tianjin Development and Reform Commission (TDRC) said.

“The final oil supply from Russia to China will reach 25m-30m tonnes/year. The additional new supply of 10m-15m tonnes/year will only be used in the new refinery and the rest will be channeled to CNPC’s other refineries in northeast China,” the source told ICIS news in Mandarin.

Jiang Jiemin, the general manager of CNPC also signed on Tuesday a framework agreement on Russia’s natural gas exports to China with natural gas company Gazprom. According to the agreement, Russia will supply 70bn cubic meters of natural gas every year, China’s Shanghai Securities News reported.

Jiang also inked the Memorandum Of Understanding (MOU) on promoting the upstream and downstream cooperation with Russia’s oil firm Rosneft, CNPC said on its website.

Meanwhile, the location of new refinery has been shifted from Binhai Chemical Industry Park in Tianjin to Nangang Industry Park, the TDRC official confirmed, but declined to disclose the investment figure.

“All the details still need further discussion and the refinery project has not obtained the green light from the government,” she said in Mandarin.

“As for the downstream plants, such as the cracker, we have no details to release yet,” she added.

This deal coincides with the three-day visit of Russian Prime Minister Vladimir Putin to Beijing.

China and Russia signed twelve cooperation agreements involving trade, energy, space and military sectors during this visit, state-run media ChinaDaily reported.

Russian crude supplies to energy-hungry China are expected to be channelled through a new Sino-Russian crude oil pipeline, which began construction early this year. Russian crude oil supplies to China are expected to start when the pipeline is finished in 2011.

With additional reporting from Dolly Wu

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