On Friday, Russia's Rosneft agreed to double its oil supplies to China. The deal was said to be valued at US$270 billion. The Kremlin energy champion shifted its focus to Asia as the European markets became saturated and hit with crisis.
Starting the second half of the decade, Rosneft will begin its supply of 300,000 barrels per day to China over 25 year period. This will be on top of the 300,000 barrels per day that it already ships to the largest energy consumer of the world.
Russia started its first oil supply to China by railway. In 2009, it opened a new pipeline through the Pacific port, Kozmino. Russia's export patterns have dramatically changed. Russia is already exporting about 17% of its overall exports to Asia together with the supplies to Kozmino. This would translate to 750,000 barrels per day of its 4.4 million bpd.
According to a source familiar with the transaction, the new agreement was timed to tie in with the launch of new streams of East Siberian crude. This will avoid large redirection that will allow enough time for export infrastructure expansion.
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