Russia tries to sell oil to Asia through pipeline in Israel

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Last updated at: (Beijing Time) Wednesday, November 05, 2003

Russia tries to sell oil to Asia through pipeline in Israel

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As China and Japan are fighting tooth and nail for a favorable turn in the future layout of Russia's oil pipeline, Russia is considering selling its crude oil to Asian countries via a pipeline in Israel, so as to sharpen its competitive edge against Gulf oil on the Asian market, reported the Moscow Times on November 3.

The Elath--Ashqelon pipeline, at a full length of 254 kilometers, has been engaged in transporting oil from the Red Sea to the Mediterranean for a good 30 years. It will change its direction for the second time in November to enable a VLCT (Very Large Crude Oil Tanker) to ship Ashqelon oil from Elath at the shore of the Red Sea to Asia.

Russia has long been considering increasing its oil sale to Asia, for the latter's demand for oil supply began to surpass that of Europe. While China and Japan, among big Asian importers, are intentionally reducing their dependence on the oil from the Middle East. The pipeline provides an alternative for oil companies, and save their oil tankers to go along the lengthy winding route of Africa and troubles caused by the limits imposed on VLCTs to pass through the Suez Canal.

From a long-term point of view the pipeline is a practical way for Russia to sell oil to Asia, said a senior analyst at London Consulting Company. Yet the volume exported depends on the price of Russia's oil, that is, the price must be low enough to attract Asian customers.

The price of Russian oil, under normal conditions, is four times that of Middle East oil. But the former may be competitive if shipped from the Red Sea to Asia, since a VLCT, which is capable of carrying 2 million barrels at a time, needs about 10 days to sail from the Red Sea to Asia. However, that from the Mediterranean to Asia requires 30 to 35 days. So by taking the former route the transportation cost is dramatically reduced.

The first VLCT loaded with crude oil from Russia's Ural oilfield will set out from the Elath port for Asia in mid November. Currently it needs four days to pipe Russian oil from Ashqelon to Elath port, where the oil would be carried onto VLCTs and shipped to Asian countries. The pipeline is capable of transporting 60 million tons of crude oil each year, or 1.1 million barrels every day.

By PD Online staff member Li Heng

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