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Russia increases oil supplies to China

May 07, 2014, 14:22 UTC+3 MOSCOW
Rosneft supplies oil to China both through a branch of the East Siberia - Pacific Ocean (ESPO) pipeline and in transit via Kazakhstan
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MOSCOW, May 07. /ITAR-TASS/. Russia’s oil company Rosneft has increased oil supplies to China in January-April 2014, compared with the same period last year, by 47.3% to 7.5 million tons, according to materials of the company’s central dispatching department.

In April, oil supplies to China increased by 44.5% to 1.8 million tons.

In 2013, Rosneft supplied to China 15.8 million tons of oil. The supplies in the first quarter of 2014 reached 5.6 million tons.

in June 2013, Rosneft signed with China National Petroleum Corporation (CNPC) a contract on the supply of 360.3 million tons of oil within 25 years worth $270 billion. Under the document, Rosneft was to increase oil exports to China starting from January 2014.

Rosneft supplies oil to China both through a branch of the East Siberia - Pacific Ocean (ESPO) pipeline and in transit via Kazakhstan.

Rosneft in 2014 has received the first tranche of the advance payment for oil supplies of more than 360 million tons within the next 25 years in the amount of $20 billion. On November 11, 2013, Rosneft, KazMunayGas and KazTransOil signed a preliminary agreement on the oil transportation through the territory of Kazakhstan. Oil company Rosneft in the first quarter of 2014 exported to China in transit through Kazakhstan 1.7 million tons of oil. The annual transit through the Atasu - Alashankou pipeline, linking Kazakhstan and China, may reach 7 million tons.

China is interested in the route via Kazakhstan, as China’s CNPC holds a 50% stake in the Atasu - Alashankou oil pipeline. The increased transit of Russian oil to China will allow Kazakhstan to load the pipeline by means of the free volumes that are currently supplied to the West and will be replaced by Rosneft’s volumes.

Mattias Westman, head of Prosperity Capital (a major portfolio investor in Russian companies’ shares) assesses the situation as follows, “I don’t think that the West, for the sake of Ukraine, is ready to venture a blockade of Russia’s oil and gas. If there is no petrol in Munich, Vienna or Warsaw, and the US oil prices go up by 20-30%, this will be a real headache. As for Russia, it will be simply supplying oil to China."

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