RUSSIA - Yukos Oil P/L To China.

Yukos is promoting a 1m b/d crude oil pipeline from Russia's far eastern part of Siberia at Angarsk to Beijing to pass through the old Chinese oilfield of Daqing. Its initial capacity would be 400,000 b/d by 2005, later rising to 600,000 b/d and reaching 1m b/d by 2010. To help finance this project, Yukos wants the Chinese government to provide offtake guarantees at a fixed price for 25 years. Beijing has said it would only guarantee a five-year offtake. Russian Premier Mikhail Kasyanov intervened in mid-2002 and offered to back the Yukos project if the latter signed a five-year supply agreement with China for 400,000 b/d. The Russian section of the pipeline would run 2,400 km from the giant east Siberian oilfield of Yuruchenno-Takhomskaya, about 500 km north of the existing Tomsk-Angarsk pipeline, which Yukos is to develop. SlavNeft has made bid claims for oil in a neighbouring field, which could help fill the pipeline to China.

TransNeft is promoting a rival project for 1m b/d of Russian crude oil to be made available to China and other Far Eastern markets at Russia's Pacific port of Nakhodka. It would build a pipeline from east Siberian oilfields to Nakhodka. TransNeft, worried that the Yukos project could undermine its pipeline monopoly, insists its proposal is far more viable.