YUKOS aspires staking out the perspective Chinese market while high prices for petroleum allow using expensive rail transportation.
Deliveries of petroleum to China by rail, according to analysts, are twice more expensive for the companies than through pipes. Nevertheless, while officials have not determined the route of the pipeline, YUKOS prefers to increase deliveries to China in any ways, aspiring thus to get long-term agreements even before the construction of the oil pipeline. The head of YUKOS Michael Khodorkovsky repeatedly declared that the export of petroleum by rail is unprofitable for the Russian companies already at the price of 20 $ per barrel. But it is too early to be afraid of that. Yesterday the April future exceeded 34 $ for barrel.
The volume of petroleum export to China from YUKOS by rail has reached 1,5 million tons in 2001 . In 2002 China imported 69,4 million tons of crude petroleum (4,4 % was the share of Russia). YUKOS has sold to Chinese companies about 1,9 million tons. In connection with the increased oil recovery ther is an attempt to open new markets.
YUKOS already has agreed with Chinese Sinopec upon the increase of petroleum deliveries to 1,6 million tons in 2003 and up to 2,5 million tons in 2004. Also deliveries to Chinese national petroleum company - CNPC, should double this year and increase to over 2 million tons. All this petroleum will be transported by rail through the territory of Mongolia.
Now YUKOS faces a problem of railway tanks shortage, and discusses the opportunity of expansion of capacities at the border station Naushki, where special carriages for the tanks designed for narrower Chinese railway tracks are situated. Russian - Mongolian joint venture "EastAsiaTransit", in which YUKOS owns 66 % of shares is engaged in these works.
The decision on a route of the pipeline to China will be taken at the session of the government in the middle of March. Transneft plans the construction of an export oil pipeline from Angarsk (Irkutsk region) to the Pacific coast of Russia (port Nahodka), whence petroleum will be delivered by tankers to Asian markets. If this idea is developed, it inevitably will compete with the project of YUKOS. Nevertheless there is a possibility that both oil pipelines will be constructed.
Transneft gives reason for the advantages of its plan: danger of concentration of exports streams on one even very big market. Howeber on the side of YUKOS is China, which prefers the construction of oil pipeline ?Angarsk ? Datsin? and declared its readiness to invest $700 million in this project. The cost of the pipeline " Angarsk - Datsin " will be 2,4 billion dollar and it should provide petroleum delivery from deposits in Eastern Siberia to China. If "Angarsk - Datsin" oil pipeline is built by 2005 "YUKOS" will completely stop rail transportation to China.
Author: Nana Bendukidze
