 Russia, China to invest 5.0billion dollars in refinery: aide Moscow (AFP) Sept 21, 2010 - Russia and China agreed on Tuesday to invest five billion dollars in the construction of a refinery in China as Moscow seeks to diversify its energy clients, an aide to Russian deputy prime minister Igor Sechin said. Rosneft, Russia's biggest producer of crude, and China National Petroleum Corporation (CNPC) agreed earlier in the day to build a new, 13-million-tonne per year refinery in Tianjin, a port city near Beijing, Rosneft said "Investments in the project will total five billion dollars (3.8 billion euros)," a Sechin aide told AFP from Tianjin. Russia will own 49 percent in the project and China 51 percent, he said. "This is just the construction of the plant," he said, adding that under the second phase of the project the two companies planned to build at least 500 petrol stations in China. Sechin, who is in China ahead of President Dmitry Medvedev's visit there on September 26-28, is in talks with Chinese officials and attended a ground-laying ceremony for the new refinery in Tianjin earlier in the day. Russia will supply 70 percent of the crude to the plant, while the remaining 30 percent would come from the Middle East, Sechin's aide said, speaking on condition anonymity in line with government policy. Rosneft said in a statement that the plant would be completed in 2015, while Sechin's aide said a feasibility study for the plant would be ready within the next six months. It will take another two years to build the plant once the feasibility study is done, he added. In recent years, Moscow and Beijing have intensified energy cooperation as Russia is keen to diversify its client base beyond its traditional European consumers and China is seeking to secure energy resources to fuel its growing economy. Rosneft president Eduard Khudainatov, speaking at the ground-breaking ceremony, called the refinery a "landmark in the history of Russian-Chinese relations." "This is another practical step in the development of cooperation between the largest oil companies of our two countries," Rosneft quoted him as saying. Travelling to China at the invitation of Chinese President Hu Jintao, Medvedev will visit Dalian, Beijing and Shanghai, the Kremlin said. |
The think tank said the producer group was upbeat as it marked the 50th anniversary of its founding in Baghdad in 1960. Unlike previous years, the Organization of Petroleum Exporting Countries since the 2008 economic downturn has demonstrated success in enforcing reduced production to prop up oil prices.
OPEC's solidarity, however, could unravel in response to events such as a war in Iran or Iraq's re-entry into OPEC's quota system that would require other members retreating on output to make room for increased Iraqi production, CGES said.
OPEC production cuts in 2009 helped to lift oil prices from about $30 a barrel to the current $70-$80 a barrel range. Crude oil prices climbed to more than $76 per barrel overnight in New York with the dollar index down 0.38 percent.
Crude oil has held steady for most of September but tentatively followed a monthlong rebound in stocks. Early in the month, crude oil prices hovered near $75 per barrel. On Tuesday morning, prices reached $76.29 per barrel, trading in a range from $75.65 to $76.37.
CGES said OPEC lead producer Saudi Arabia has the ability to keep prices in this range for the foreseeable future by manipulating the price of its exports relative to benchmark grades.
Despite a 3.5 million barrels a day cut in output, OPEC's aggregate oil export revenues are expected to be almost 25 percent up on the 2009 recession-hit level, CGES said. At around $625 billion, OPEC revenues should be almost exactly where they were in 2007, when output was 1 million barrels per day higher than the estimate for 2010, said the center, founded by former Saudi petroleum minister Sheik Zaki Yamani.
Aside from security fears in Iran and Iraq, CGES said, OPEC was also concerned about the pace of recovery in the global economy and fears that oil prices could weaken before winter.
"Things could change dramatically over the coming years," warned the center. "At some point Iraq will have to be brought back into OPEC's quota system, as its production capacity increases, a process that could be fraught with difficulties, if it is even partially successful at realizing its expansion plans.
"Other members will not concede market share easily, while Iraq and its foreign investors will both want a return on the billions of dollars poured into the country," CGES said.
Added to those pressures, growth in the OECD economies is expected to slow in the second half of this year, especially as government budget cuts come increasingly into play.
China's economic expansion is also slowing slightly as the government seeks to ward off inflationary pressures, CGES said.
Citing pressures on supply from political events or uncertainties elsewhere, CGES said, "There is also a very slim chance of a much larger loss of Middle Eastern oil production from some form of military action against Iran but the likelihood of this is seen as extremely low."
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