9 Sep 2010 16:59

China wants lower price for oil on ESPO spur - source

BEIJING. Sept 9 (Interfax) - China believes it may be able to secure a lower price for Russian crude oil delivered on the Eastern Siberia-Pacific Ocean pipeline (ESPO) spur that terminates at Daqing, a source close to the CNPC leadership told Interfax-China.

"We believe it would be fair to purchase the oil from Rosneft at a price lower than that offered at Kozmino [ESPO's terminus]," the source said.

"The distance from Skovorodino [where the spur to China branches off from ESPO] to Kozmino is about 2,000 kilometers, but just 60 kilometers to the Chinese border. Thus, the price China pays should be lower [by the difference in the cost of transportation on the two routes]," the source said.

"The issue is currently being discussed. We hope for a favorable outcome," he said.

In addition, "Russia demanded that the technical oil [600,000 tonnes] needed to fill the oil pipeline in China from Mohe [on the Russian border] to Daqing be acquired from Rosneft," the source said, referring to a meeting of the Russian-Chinese energy cooperation subcommission of the commission on preparing regular meetings of the heads of state, which was held in Blagoveshchensk in August.

CNPC "already reached agreement with other suppliers to buy the technical oil at a lower price. However, it agreed to the Russian demand," he said.

CNPC had been in talks to acquire the technical oil from TNK-BP , Interfax has learned.

A TNK-BP spokesman said the company would uphold the confidentiality of its relations with all clients. "Accordingly, we cannot discuss these issues," the spokesman said.