Kazakhstan starts work on oil pipeline to China

ASTANA, Sept 28 (AFP) - Kazakhstan began construction on Tuesday of a 1,000-kilometre (620-mile) section of oil pipeline that could eventually supply Caspian oil to China, a top Kazakh oil official said.
"We have a detailed plan and accordingly began work today," Kazakhstan's Energy and Mineral Resources Minister Vladimir Shkolnik told journalists on returning from a pipe-welding ceremony in Atasu, central Kazakhstan, where the pipeline section begins.
The section just started will take oil across eastern Kazakhstan into China's western Xinjiang region, where it will either be refined or sent onwards to China's booming east via still-to-be-completed pipelines, Chinese officials have said.
It will cost 700 million dollars (580 million euros), be financed equally by Kazakhstan and China and will be completed by the end of next year, Shkolnik said.
Initially the section could be used to send about 10 million tonnes per year (200,000 barrels per day) of oil from central Kazakhstan's modest-sized Kumkol field, which is operated by Canadian company PetroKazakhstan, observers have said.
But ultimately it is intended to form part of a 3,000-kilometre (1,875-mile) pipeline from the oil-rich Caspian shelf, where China's CNPC oil major has a number of assets.
The overall project has raised eyebrows among analysts sceptical about its viability, mainly due to the vast distances involved and the disadvantage for Kazakhstan of having a single buyer at the pipeline's receiving end.
However on Tuesday Shkolnik indicated that a solution might be in view, saying that Russia might be interested in accessing the pipeline.
"The possibility of Russia using this pipeline to transport its oil to China is being looked at," Shkolnik said.
"China is responsible for seeing that the pipeline is filled," he added.
Russia is thought to have rejected a plan to build a pipeline from its territory into northern China, favouring an alternative pipeline to the Pacific coast.
Kazakhstan hopes to triple its overall oil output to around 150 million tonnes annually by 2015.