Russia To Begin Test Operations On China Oil Pipeline This Week

Russia will begin test operations this week on a new oil pipeline that will start shipping Siberian crude to the Chinese border from Jan. 1, the country’s oil pipeline operator said Friday.

The 84-kilometer pipeline running from the Russian town of Skovorodino to the Chinese border is part of a loan-for-oil deal signed last year between the two countries.

Under the deal that was negotiated for almost a decade, China is providing Russia’s state-owned oil producer OAO Rosneft (ROSN.RS) and pipeline operator Transneft (TRNFP.RS) with $25 billion in long-term loans.

In exchange, Russia will export 15 million tons of crude to China annually over 20 years staring from 2011 through the new pipeline, equivalent to 300,000 barrels a day.

“Test operations will begin this weekend. It will take three to four days to fill the pipeline,” a Transneft spokesman said.

China’s state-owned CNPC is constructing the pipeline, which will extend another 1,000-kilometers to the Chinese oil production and refining hub of Daqing in the country’s northeast.