China's First Direct Oil Import Pipeline Begins Commercial Operations

Strategic Insights -

Commercial operations for China's first direct oil import pipeline began at Alataw Pass, Northwest China's Xinjiang Uygur Autonomous Region, after crude oil from Kazakhstan flowed into a petroleum tank on July 12. The pipeline, built by China National Petroleum Corporation (CNPC) and Kazakh state energy company Kazmunaigaz, is expected to enhance China's oil supply and provide an outlet for Kazakhstan's oil exports.

Key Takeaways:

  • The pipeline will initially transmit 10 million tons of oil per year, increasing to 20 million tons when completed in 2011.
  • The pipeline is expected to alleviate China's excessive reliance on the Strait of Malacca, a traditional route for 80% of China's imported oil.
  • China's crude oil import totaled 127 million tons in 2005, with 40% of total consumption coming from imports.
  • Kazakhstan's crude oil output topped 50 million tons in 2002, with 70% of its oil being exported.
  • China's oil import from Kazakhstan is expected to climb to 4.75 million tons in 2006 and to around 8 million tons in 2007.
  • The pipeline is a win-win strategy for both countries, easing China's energy dearth and providing an ideal destination market for Kazakhstan's oil resources.
  • China has set up an oil meterage station at Alataw Pass, marking the entry of crude oil from Kazakhstan into China.
  • The pipeline's first phase will transmit oil to Dushanzi, where the country's largest oil refinery plant will become operational in 2008, producing 5.5 million tons of refined oil per year.

Statistics:

  • 960 km: length of the pipeline
  • 20 million tons: total capacity of the pipeline per year
  • 10 million tons: initial capacity of the pipeline's first phase per year
  • 15%: percentage of China's total crude oil imports for 2005 that the pipeline will transmit
  • 50,000 cubic meters: capacity of the oil tank
  • 15 days: time to fill the oil tank
  • 182 million tons: China's crude oil production in 2005
  • 195 million tons: expected crude oil production in China by the end of 2010
  • 3,000 km: total length of the pipeline
  • 2011: completion date for the pipeline
  • 2008: operation date for the Dushanzi refinery plant
  • 5.5 million tons: refined oil production per year at the Dushanzi refinery
  • 50 million tons: Kazakhstan's crude oil output in 2002
  • 70%: percentage of Kazakhstan's oil exports
  • 100 million tons: expected crude oil output in Kazakhstan by 2015
  • 80%: percentage of China's imported oil that currently passes through the Strait of Malacca
  • 127 million tons: China's crude oil import in 2005
  • 40%: percentage of China's total consumption that came from imports in 2005
  • 1.3 million tons: oil imported from Kazakhstan via Alataw Pass in 2005
  • 4.75 million tons: expected oil import from Kazakhstan in 2006
  • 8 million tons: expected oil import from Kazakhstan in 2007

Sources:

  • Asia Pulse, July 12
  • Xinhua, July 12
  • China Petroleum Exploration and Development Company
  • Kazmunaigaz
  • China National Petroleum Corporation
  • Xinjiang Uygur Autonomous Region Government