China, Kazakhstan to Build Pipelines

China, Kazakhstan to Build Pipelines From Caspian Sea
By Henry Meyer
Aug. 18 (Bloomberg)

The leaders of China and Kazakhstan agreed to finance and build a network of pipelines to supply the world's fastest-growing major economy with oil and gas from the Caspian Sea region.

``The Caspian will be linked to western China,'' Kazakh President Nursultan Nazarbayev told reporters in the capital Astana today after meeting with his Chinese counterpart Hu Jintao. ``These are major projects and today we reached agreement on these issues.''

Kazakhstan's Atasu-Alashankou oil route will be extended and a gas link from Turkmenistan to China through Kazakhstan will be built, Nazarbayev said. The gas link will bypass Afghanistan, Tajikistan and Kyrgyzstan, landlocked countries between Turkmenistan's Caspian shore and China.

China, the world's second-largest energy user, is scouring the globe in search of energy supplies for its economy, which is expanding at an annual rate of 11.9 percent, the fastest pace in more than a dozen years. Kazakhstan and Turkmenistan are the biggest energy suppliers in the former Soviet Union after Russia. The Caspian region they share with Azerbaijan, Iran and Russia holds about 4 percent of the world's proven oil and gas reserves.

The gas pipeline will be able to move 30 billion cubic meters of fuel a year and cost as much as $4 billion to build, Energy Minister Baktykozha Izmukhambetov said in November.

Chinese Investment

The 750-kilometer (1,200-mile) extension of the Atasu- Alashankou oil pipeline will connect China with two oil fields, Kenkiyak and Kumkol, owned and operated by Kazakh units of state- run China National Petroleum Corp. The pipeline will have a capacity of 400,000 barrels a day, or about 5 percent of China's consumption.

China National Petroleum Corp., the biggest Chinese oil producer, said yesterday it will expand oil and gas co-operation with Kazakhstan after spending more than $6.5 billion so far on oil exploration, refining and pipelines in the country.

Nazarbayev, 67, met the Chinese leader as Kazakhstan held parliamentary elections that are expected to cement his 18-year rule. Hu praised Nazarbayev for his ``democratization'' of the former Soviet republic.

China's Oil Tanker Boom

China's Oil Tanker Boom
Lee Geng
Apr. 09, 2007
EnergyTribune.com

During the Ming Dynasty six hundred years ago,famed Chinesenavigator Zhengexplored the seas with his mighty fleet. Today, China is a manufacturing power, not a naval one. And that bothers the Chinese government. With oil imports of about 2.7 million barrels per day (nearly half of its total consumption), the government wants to double its fleet of supertankers by 2008.

At present, Chinese tankers only transport about 10 percent of the country’s oil imports. The government wants to increase that percentage to help ease concerns over energy security, avoid the possibility of shortages, and perhaps avert political frictions that could lead to delays or blocks on deliveries.

China currently has 23 300,000-deadweight tonnage (dwt) tankers, known as very large crude carriers, or VLCCs. Those VLCCs account for about 30 percent of China’s tanker tonnage and about 4 percent of the world’s fleet.

Most of the remaining tankers in China’s inventory are small and/or old, and thus better suited for the coastal trade than for international oil shipments. Chinese tankers on average are 30 percent older than their international counterparts and much smaller, averaging only 20,000 dwt (about one-fifteenth the size of a VLCC).

By 2010, China wants to have a VLCC fleet capable of shipping over 50 percent of its expected 4 million barrels per day of imports. By 2020, China plans a fleet of 70 VLCCs. Big Chinese shipping corporations are ordering VLCCs to achieve that target. China Merchants Group, with the country’s largest VLCC fleet, will add six before 2008, with China Ocean Shipping Corp. (COSCO) adding five. State-owned China Shipping Group (CSG) is operating three VLCCs and nine are on order for a total of 12 by 2010. This will allow it to boost its total annual capacity to over 100 million tons of oil.

COSCO operates eight VLCCs and has another seven under construction. One of China’s largest shipyards, Dalian Shipbuilding Industry Co., Ltd., has received more than 20 orders from both domestic and foreign companies for VLCCs, scheduled for delivery around 2009. Other players in the tanker business are ordering new vessels as well. Nanjing Tanker Corp. has plans to establish a fleet of 10 VLCCs. Hebei Ocean Shipping Co. has ordered three VLCCs and Nanjing Changjiang has ordered eight.

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