China to double Russia ESPO pipeline imports to 30 mil mt/year in Oct 2017

Singapore (Platts)--17 Sep 2015 537 am EDT/937 GMT

China will double its pipeline imports of Russian ESPO crude to 30 million mt/year as early as October 2017, after the second Mohe-Daqing pipeline comes on stream, PetroChina Vice President Sun Longde said Wednesday, according to local media.

He did not say when construction would start.

The existing 15 million mt/year Mohe-Daqing pipeline in northeastern Heilongjiang province receives Russian ESPO crude from the border Mohe station and sends it to Daqing, started operations in January 2011.

The pipeline was built to take 15 million mt/year of ESPO crude from Rosneft for 20 years.

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The second ESPO crude pipeline will run parallel to the first.

Under earlier deals, Russia's state-owned Rosneft agreed to increase ESPO deliveries to China National Petroleum Corp. by 5 million mt/year in 2015 and another 5 million mt/year in 2016.

But the delivered volume has only increased slightly this year.

PetroChina has taken a total of around 11.02 million mt from the existing pipeline over January-August, or an average 33,105 b/d, with the yearly volume for 2015 expected to hit 16.48 million mt at the current transmission rate. While well below the 20 million mt/year target, this would be up 5.7% from 15.6 million mt shipped in 2014.

Rosneft redirected some of the ESPO exports to China via its Kozmino port, the destination of its only export pipeline to Asian markets.

PetroChina's 20.5 million mt/year Dalian refinery has been receiving seaborne cargoes shipped from Kozmino. The refinery this year will take around 5 million mt/year in seaborne cargoes.

Dalian refinery also takes ESPO crude shipped via pipeline from Daqing, with the 2015 volume estimated at 3.5 million mt.

Three other PetroChina refineries are major takers of pipelined ESPO from Daqing: 9 million mt/year Liaoyang Petrochemical in northeastern Liaoning province, the 10 million mt/year Jilin Petrochemical in northeastern Jilin province and the 5 million mt/year Harbin Petrochemical in Heilongjiang province.

ESPO crude makes up all of Liaoyang Petrochemicals' feedstock and 60%-65% of the Dalian refinery's feedstock.

Jilin and Harbin refineries process ESPO crudes and domestic onshore crudes such as Daqing.

--Edited by Meghan Gordon,

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