In an attempt to move their energy export operations closer to home, Russia has opened a new oil pipeline with China that will reduce the country’s dependence on European trade.
The two nations, although communist allies, have only recently completed a border agreement and fought a war in 1969. The leaders of both countries are obviously now prepared to put political differences aside in favor of greater economic co-operation.
President Dmitry Medvedev attended a ceremony with his Chinese counterpart Hu Jintao to mark the opening of the pipeline in Beijing on Tuesday. Both men simultaneously pressed a button that released the first flow of oil into the pipe.
“This project has been nearly 15 years in the making and we are delighted to finally open the pipeline which represents a very important and strategic physical and psychological link between our two nations,” said Mr. Medvedev. China and Russia also now carry out military exercises together around the Xinjiang area of northern China.
Russia’s current pipelines are a maze of links that head to Eastern Europe, its main trading partners. Moscow has been making a concerted effort to diversify its exports and the new pipeline represents that shift in strategy for the nation’s energy industry.
Many analysts believe that such a shift is a priority for Russia as it looks to establish economic ties with its neighbors.
The new line weaves its way down the east Siberian steppes and connects the Russian town of Skovordino, the administrative center of Skovorodinsky District of Amur Oblast, to the Chinese crude hub of Daqing.
PetroChina will be the company responsible for purchasing and distributing Russian oil imports which are expected to top 400,000 barrels a day once official business starts in January 2011. State-controlled Rosneft will handle the oil at the source.
China has been keen to move away from coal to cleaner gas use and the upcoming oil imports from Russia will be followed by gas if plans can be finalized on the two gas pipelines that have been discussed for over four years. Progress has been delayed due to disagreements over price structuring.
A gas agreement is still not close to being completed, as China National Petroleum Corp and their financial backers, CMC Gao Hua has not managed to reach an equitable deal with Russia’s biggest gas interest Gazprom, who previously said they had completed “promising preliminary talks” with the Chinese.