China to build private pipeline to import oil from Russia

China will start construction of the country’s first private pipeline to import oil from Russia as early as this month.
The 30-kilometer pipeline, with an estimated investment of 520 mm yuan (about $ 65 mm), will link railway lines between the north-eastern city of Heihe in China’s Heilongjiang province and Siberia’s Blagoveshchensk in Russia.

Its first stage transmission capacity will reach 3 mm tons annually.
“We aim to provide a conduit for companies that have oil import and export rights... it’s just like building a highway where we collect the tolls,” Hao Chunli, deputy general manager of Xinghe Industrial Development Co, the Chinese operator of the pipeline.
Xinghe Industrial will invest 342.33 mm yuan ($ 43 mm) in the pipeline, while the Russian partner will contribute the remaining 170 mm yuan ($ 22 mm) the Heihe municipal government said.

The pipeline begins in Blagoveshchensk where there will be an oil storage facility with a capacity of 24,000 tons, and ends at Heihe where an oil storage facility with a capacity of 60,000 tons will be built.
Current oil trade between China and Russia relies mainly on railway transport, but it is hampered by the fact that Russian railroads need modernization and there is an acute shortage in the oil terminal capacity.

Russian oil exports to China are threatened by railroad oil terminal bottlenecks.
Neither the oil companies nor the transportation monopoly Russian Railways are willing to invest funds for an upgrade.