workers inspect the pipelines and oil storage tanks of China and Russia crude oil pipeline in Mohe, northeast China's Heilongjiang Province, Saturday. The nearly 1,000-kilometer (625-miles)-long China and Russia crude oil pipeline is a joint project conducted by PetroChina, China's largest oil and gas producer, and Rosnef, Russia's largest oil company. (AP)BEIJING/MOSCOW: The first oil pipeline between Russia and China, feted as a mark of growing ties between the world's biggest oil producer and its biggest energy consumer, started operation Saturday, state media said. Oil began flowing through the pipeline that links Siberia with refineries in the northeastern Chinese city of Daqing at 11:50 A.M. (0350 GMT) after two months of testing, according to the Xinhua news agency. Igor Dyomin, a spokesman for Russian oil pipeline monopoly Transneft, said "the shipments started at 0030 (2130 GMT Friday). We plan to pump 1.3 million tons of oil in January." According to the final schedule for crude oil exports and transit, in January-March 2011, Russia will ship 3.68 million tons of oil to China via ESPO. An annual plan envisages the supply of 15 million tons (300,000 barrels per day). Many oil market participants expected it would effectively double Russian sales to China, which totaled 12.8 million tons (308,000 bpd) in the first 10 months of 2010. Transneft started to ship the barrels along the first stage of the pipeline, which runs in a 2,757-km arch above Lake Baikal. So far the oil had been transported only by rail to the Pacific port of Kozmino. The crude flowed to Daqing in China from Russia's Skovorodino via the pipeline Saturday. When the 4,070-km the pipeline's second stage is finished in 2013, it will be the world's longest. At a cost of $25 billion, it dwarfs all other infrastructure projects in post-Soviet Russia. Russian state oil firm Rosneft has been sending oil to China by rail ever since it bought the biggest unit of defunct oil giant Yukos six years ago. The purchase was facilitated by a $6 billion loan from China, which effectively prepaid $17 per barrel for 48.4 million tons of oil. That contract ran out this year, and Rosneft decided not to extend it, citing the low selling price. Chinese President Hu Jintao and his Russian counterpart Dmitry Medvedev had symbolically opened the pipeline - which stretches for 2,694 kilometers (1,673 miles) on the Russian side and 930 kilometers in China - last Sept. 27. It can carry 30 million tons of oil each year and will help China achieve its goal of diversifying energy imports, state media said. Under a 2009 deal China will receive oil for 20 years in exchange for loans worth $25 billion. China has overtaken the United States as the largest energy consumer, and derives 70 percent of its energy from coal combustion but aims to diversify its sources to include gas, nuclear and renewables such as wind energy. In October 2009, during a visit to Beijing by Russian prime minister Vladimir Putin, the Russian giant Gazprom and China National Petroleum Company (CNPC) signed a framework agreement providing for deliveries of 70 billion cubic meters of Russian gas to China each year. But the agreement has so far not come into force because of disagreements between the two emerging giants over gas prices.
