Kazakhstan Opens Oil Pipeline to China

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Kazakh President Nursultan Nazarbayev on Thursday ceremonially opened the taps of a new pipeline carrying oil from one of the region's greatest energy powers to one of its hungriest consumers, China.

The 625-mile pipeline designed to carry 140 million barrels of oil a year opens a huge market for the Central Asian nation expected to become one of the world's top oil exporters. Kazakhstan is aiming to more than double its production from 1.3 million barrels to 3 million barrels a day by 2015, the Oil Ministry says.

For China, the new route is a key step toward securing adequate foreign energy supplies for its booming economy. Out of China's total oil consumption last year of 6.7 million barrels a day, almost half came from imports, according to figures from oil company BP PLC.

The oil-rich former Soviet republic's first pipeline bypassing Russia began to fill with oil as Nazarbayev pushed a button at the headquarters of the national KazMunaiGaz company in the capital Astana. The pipeline is a 50-50 joint venture between state companies China National Petroleum Corp. and KazMunaiGaz.

"It will work for the good of our two peoples," Nazarbayev said.

Until now, the main route for Kazakh oil exports has been the Caspian Pipeline, which was launched in 2001 to join the giant western Tengiz oil field with Russia's Black Sea port of Novorossiisk.

The new pipeline starts in the central Kazakh town of Atasu and runs to the Altaw Pass in northwestern China. It will initially carry oil from the Kumkol field in central Kazakhstan, which is being worked by CNPC following its acquisition of the field's operator earlier this year.

By 2011, when it reaches full capacity, the pipeline is expected to be used to ship oil from Russia's western Siberia.

China is so desperate to expand its energy imports that both Russia and Kazakhstan will be able to benefit for a long time to come, said Konstantin Batunin, an oil and gas analyst at Alfa Bank in Moscow.

"China's demand for oil is becoming comparable to that of the United States and judging by their economic growth, they will be needing lots of oil. One cannot expect Russia and Kazakhstan to be competing for the Chinese market in the foreseeable future," he told The Associated Press.

The partners are also planning to extend the pipeline to the Caspian Sea by joining it with a 435-mile pipeline that runs within Kazakhstan from the Caspian city of Atyrau to the Kenkiyak oil field farther east.

Linking the two pipelines will give Kazakhstan more outlets from the Caspian Sea to ship oil to foreign markets and will also give the Chinese access to the Caspian oil.

"Only a small stretch remains (to build) to reach the Caspian oil," Nazarbayev said Thursday. He then turned to Oil Minister Vladimir Shkolnik and asked: "When do we begin construction?"

"Tomorrow," Shkolnik replied.

Shkolnik said earlier that for the new Chinese pipeline to begin functioning, it will have to be filled with 600,000 tons of oil, which will be completed by mid-2006.

The pipeline launch comes months after the opening of another alternative export route for Kazakh oil — the 1,100-mile pipeline that runs from the Azerbaijani port capital of Baku, via Georgia to the Turkish Mediterranean port of Ceyhan. Kazakh petroleum has not yet entered that pipeline.

Kazakh officials said the country could ship up to 33 million tons of oil yearly through that U.S.-backed pipeline, but no deal has yet been signed.

In addition, Kazakhstan has expressed interest in taking part in construction of Ukraine's Odessa-Brody pipeline and extending it to the Polish Baltic Sea port of Gdansk. The pipeline links the Black Sea port of Odessa with Brody on the Ukrainian-Polish border and could allow Kazakh oil to reach the Baltic states.