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. Last Updated: 07/27/2016

China Pipeline 'Already Behind Schedule'

Russian oil pipeline deliveries to China are unlikely to begin before 2006, a year later than scheduled, even if the country quickly decides on the route for the link, a source in the project leader said Tuesday.

The source in Yukos, which has designed a project to build a 400,000 barrel per day link to China by 2005, said delays in deciding whether to build a link to China or the Pacific coast had put deadlines beyond reach.

The source also said the company was looking to boost annual rail shipments to China to between 10 million metric tons and 15 million from the current 4 million to compensate for the lack of the pipeline and meet rising demand in energy-hungry China.

The acknowledgement was made ahead of Prime Minister Mikhail Kasyanov's visit to China next week, although it remains unclear whether he will bring to Beijing a formal answer on the date and terms of construction.

The government decided in May to build a pipeline to China, the world's third-largest oil consumer, and put off a plan for a bigger and more expensive 1 million bpd link to the Pacific coast until it finds more oil reserves in eastern Siberia.

The decision was viewed as a big victory for Yukos, which will soon acquire its smaller rival Sibneft to become the country's largest oil producer.

The combined firm will look for new markets for its booming oil production, and Yukos earlier this year signed a $150 billion deal to supply China's CNPC with 700 million tons of oil in 2005-30.

The commitment by Yukos to start supplies by 2005 was also part of a 1999 agreement between the two states.