Kazakhstan's Oil Supply to China Via Pipeline to Rise

By Winnie Zhu

Sept. 24 (Bloomberg) -- Crude oil delivered to China from Kazakhstan via a pipeline may increase 30 percent this year as energy demand rises in the world's fastest-growing major economy.

The trans-border pipeline may transport 6.5 million metric tons of crude from the Central Asian country this year compared with 4.77 million tons in 2007, Guo Yi, vice president of PetroKazakhstan Inc., a unit of China National Petroleum Corp., said at a conference in Shanghai today.

The oil link will reach its full annual capacity of 10 million tons by October 2009 once China National Petroleum finishes building a branch line from Kenjiyak to Kumkoil in Kazakhstan, Guo said. The Central Asian nation is China's seventh-biggest oil supplier last year.

The capacity of the $800 million trunk line, completed in December 2005, will be expanded to 20 million tons a year gradually, Guo said, without giving a timetable.

PetroKazakhstan, the third-largest foreign oil producer in Kazakhstan, pumps around 26,000 tons of crude a day, according to Guo. Half of that is exported to China via the pipeline, Yang Chao, the company's crude oil trading manager, said on the sidelines of the conference.

Crude output is likely to be steady in future as most fields are old and production is not expected to increase, Guo said.

PetroKazakhstan's refinery in Shymkent in the country's south processed 4 million tons of crude last year, Guo said. The company is awaiting government approval to add more secondary units to boost the plant's yield of diesel and gasoline, he said.

The refinery, with a designed annual capacity of 6 billion tons, supplies most of its fuel output to Kazakhstan. Some fuel oil is exported to China, Yang said.

To contact the reporter on this story: Winnie Zhu in Shanghai at wzhu4@bloomberg.net.