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Sinopec buys more oil from Russia
By Xie Ye (China Daily)
Updated: 2004-04-27 08:57

The first batch of the Russian oil will be delivered starting May 1 by a rail link from Russian territory in Erlianhaote in China's Inner Mongolia.

The contract is part of Russia's move to considerably raise oil exports to China using trains.

Earlier last month, Yukos and Russian Railways agreed to more than double rail crude oil exports to 6.4 million tons this year, up from 3 million tons last year.

China National Petroleum Corp (CNPC) -- the nation's largest oil company -- will import 3.86 million tons, while Sinopec will purchase the remaining 2.6 million tons.

The oil delivery to China is expected to further increase to 8.5 million tons in 2005, and to 15 million tons by 2006.

Starting then, CNPC alone will buy 10 million tons of oil annually from Yukos for seven years.

Sinopec started to import crude oil from Yukos in 2000. The imports reached 1.72 million tons last year, rising from 206,000 tons four years ago.

The company imported 600,000 tons of crude oil from Yukos in the first quarter of this year.

Sinopec and Yukos will renew their oil trading contract when the current pact finishes.

Analysts said China and Russia have great potential to increase oil trade. Russia has rich oil and gas reserves, while China needs huge oil imports to fuel its economic boom.

They said to increase oil exports by rail will be beneficial to both Yukos and Chinese oil companies since the proposed Sino-Russia oil pipeline project is in stalemate.

China is competing with Japan to transport the same East Siberia crude via different oil pipelines. The Kremlin has yet made a final decision.

Yukos is the major oil trading partner with China. The Russian company exported about 3 million tons of oil to China last year, accounting for 60 per cent of Russia's crude exports to China.

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