| Published: |
15 August 2006 08:29
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| Updated: |
15 August 2006 08:31
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Petroleum Intelligence Weekly reports that the first crude oil to be pumped via the Kazakhstan-China pipeline has finally reached its destination at the Dushanzi refinery, at least two months behind schedule. The 200,000 b/d pipeline has the distinction of being the first ever to pump crude directly to China, but there are pricing issues that need to be resolved before a smoother flow can be guaranteed. Most of the crude is sourced from China National Petroleum Corp.'s Kazakh operations at Aktobe, with quality of around 34° and with a high sulfur content, and from its Kumkol fields shared with state Kazmunaigas. Kumkol is a light, sweet 42° API grade, but has a high paraffin content and could freeze in the line during winter - as it did this year - unless it is kept moving. For the pipeline to thrive, it will need to carry Russian crude, but traders say the Chinese are playing hardball over prices. "In ballpark terms, the Chinese want to pay Brent minus $9/bbl, and the Russians want to get Urals minus 90¢," said one trader, indicating that the two sides are about $3/bbl adrift.