CNPC studies pipeline route options for Kazakh crude

China National Petroleum Corp., or CNPC, China's largest oil and gas company, is studying two possible routes for building the local section of a pipeline transporting crude oil from Kazakhstan to China, a company official said.
Although it has already been agreed that the 3,000 km crude pipeline will terminate in Dushanzi city of China's north-western Xinjiang region, the exact route for the transport of refined oil products after that hasn't been decided. The bulk of the crude coming from Kazakhstan will be refined by CNPC's refinery in the Xinjiang region, Dushanzi Petrochemical, before being routed deeper into China.
"We haven't quite finalized the domestic route (from Xinjiang to other parts of the country)," the official said.

One option would be to pipe the oil products to the city of Chengdu in south-western China's Sichuan province, while the other option would be to pipe them to Henan province in central China, the official said. The route leading to Sichuan, which would have an annual transmission capacity of 8 mm-15 mm tpy, appears more promising than the Henan option, he said.
"China doesn't have any major refinery in Sichuan and the demand there for oil products is growing very fast," he said.

CNPC and Kazakhstan's state-owned oil company, KazMunaiGaz, plan to build the Kazakhstan to China pipeline by 2006. The pipeline will have an initial transmission capacity of 20 mm tpy. If the Chengdu route is chosen, CNPC, probably along with local companies in Xinjiang, will first build a pipeline linking Xinjiang with Lanzhou city of the north-western Gansu province.
From Lanzhou, the oil products would be transported to Chengdu via CNPC's existing 1,250 km pipeline from Lanzhou to Chongqing.

The official said the problem with the Henan route is that the local oil products market there is dominated by rival company China Petroleum & Chemical Corp., or Sinopec. However, he said this option would allow CNPC to raise its oil products market share in eastern China, because the pipeline to Henan would likely be extended to cities in the East if this route was chosen.
Based on the crude flow from Kazakhstan, CNPC has decided to double the refining capacity of Dushanzi Petrochemical to 10 mm tpy, and expand its ethylene capacity to 1 mm tpy from 200,000 tons now, the official said.