China’s ESPO crude imports via China-Russia pipelines grow 66% on year in Jan

Singapore – China has received around 2.41 million mt of Russian ESPO crude via two 15 million mt/year China-Russia crude pipelines in January, up 66% on the year, according to a local media report Monday, citing data from the Heilongjiang Entry-Exit Inspection and Quarantine Bureau.

This was up 960,000 mt from January 2017, after the second China-Russia crude pipeline started operations in January 2018. 

It was also part of PetroChina's plan to raise the ESPO crude imports from 20 million mt/year to 30 million mt/year from 2018. 

The total transmission volume of 2.41 million mt translates to a combined operating rate of 96.4% at the two pipelines, each with a capacity of 15 million mt/year. 

If the pipelines operate at the same rate for the rest of the year, the total transmit volume could reach 28.92 million mt by the end of 2018, close to the initial plan of 30 million mt/year. 

A total of 16.5 million mt of ESPO crude has been sent via the first pipeline in 2017, or 110% of its total capacity of 15 million mt/year, according to data from the bureau. 

The first Russia-China crude pipeline, or the Mohe-Daqing pipeline within China, began operations in January 2011. The pipeline, located in the northeastern Heilongjiang province, receives ESPO Blend crude from the Mohe station on the China-Russia border and sends it to Daqing. The second parallel pipeline of the same capacity was completed in November last year. 

Out of a roughly 20 million mt/year of imports last year by PetroChina, 16.5 million mt of ESPO crude was via the first pipeline, with the rest 3.5 million mt coming via seaborne cargoes, according to a PetroChina source.

Of the pipelined ESPO crude in January, PetroChina's 20.5 million mt/year Dalian Petrochemical in northeastern Liaoning province received a total of 1.1 million mt. 

This was up 600,000 mt, or 120%, from the pipelined 500,000 mt in January 2017 — accounting for 62.5% of the incremental volume of 960,000 mt in January. 

The refinery received a total of 800,000 mt of ESPO crude in January 2017, with the rest 300,000 mt coming from seaborne cargoes as the first pipeline was already operating at full capacity. 

Besides Dalian Petrochemical, Jilin Petrochemical and Harbin Petrochemical could be the major takers of the incremental volume of the rest 360,000 mt, replacing the domestic Daqing crude, the output of which has been dwindling. Those two refineries — the 10 million mt/year Jilin Petrochemical and the 5 million mt/year Harbin Petrochemical — used to process both Russian ESPO crude and domestic Daqing crude, with a combined throughputs of around 1 million mt/month. 

Jilin Petrochemical usually operates at around 90% of its nameplate capacity, while Harbin operates at around 75%. 

Other than Dalian Petrochemical, Jilin Petrochemical and Harbin Petrochemical, Liaoyang Petrochemical also processes 100% of pipelined ESPO crude. 

Liaoyang Petrochemical has received around 550,000 mt/month of Russian ESPO via the pipeline, relatively stable from a year earlier, according to a source at the refinery. 

China has received a total of 1.1 billion mt until January 31, since the first China-Russia pipeline started up in 2011, according to the bureau. 

"Monitoring Desk"

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