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. Last Updated: 07/27/2016

China Sees Boom in Oil Exports by Rail

bloombergChinese Prime Minister Wen Jiabao
BEIJING -- China and Russia have agreed to strengthen energy cooperation, including boosting Russian oil exports by rail, Chinese Prime Minister Wen Jiabao said Monday.

Oil exports by rail from Russia, the world's second-largest oil exporter, to China, the world's second-largest oil consumer, would rise to 10 million tons (200,000 barrels per day) in 2005 and 15 million tons in 2006, Wen told reporters.

China's total crude imports from Russia soared 105 percent year on year to 10.77 million tons in 2004, official data have shown.

"We have reached important consensus on energy cooperation," Wen said. "Energy cooperation between China and Russia is of equal and mutual benefit."

Wen also said that Russia would give priority to China in supplying oil through a planned Siberian pipeline.

He appeared to be trying to put a positive spin on Russia's choice of a competing Japanese plan that would have the pipeline run to the Pacific, bypassing China. Moscow later agreed to add a branch line to carry crude to China's northeast.

"The Russian government and President [Vladimir] Putin have made it very clear that first consideration will be given to China when they build the Siberian oil-gas pipeline," Wen said at the news conference.

Beijing wants the pipeline to reach the northeastern Chinese city of Daqing, the center of the country's oil industry.

The pipeline, due to be completed by 2010, is expected to cost $10.75 billion and to be able to carry 1.6 million bpd.

The two countries also would strengthen cooperation in oil and natural gas exploration and development, he said.

Wen said he would further discuss energy cooperation with his Russian counterpart Mikhail Fradkov in the second half of this year.

Russian media have said state oil firm Rosneft would lead the oil export drive to China, supplying 4 million tons this year and 8.9 million tons annually for the next five years. Another 4 million tons will come from oil major LUKoil.

Beijing is looking to Russia as a major energy supplier as the needs of China's booming economy grow. The country's total crude oil imports soared 35 percent last year to 120 million tons (840 million barrels).

China's oil demand this year may rise 7.9 percent to 6.88 million barrels a day as economic growth boosts demand, the International Energy Agency said in a report released last week, raising its prediction by 100,000 barrels from a month ago.

(Reuters, AP, Bloomberg)