CHINA/SINGAPORE: China and Kazakhstan sign agreement for a multi-billion dollar oil pipeline as china's energy need pushes oil prices to a 21-year high
Record ID:
344610
CHINA/SINGAPORE: China and Kazakhstan sign agreement for a multi-billion dollar oil pipeline as china's energy need pushes oil prices to a 21-year high
- Title: CHINA/SINGAPORE: China and Kazakhstan sign agreement for a multi-billion dollar oil pipeline as china's energy need pushes oil prices to a 21-year high
- Date: 17th May 2004
- Summary: (W3) SINGAPORE (MAY 18,2004) (REUTERS) SOUNDBITE (English) VAUTRAIN SAYING: "Oil inventory levels are actually up and although demand is up, supply levels are up even more, so just given more fundamentals you might expect the price to be softer. But what's going on I think, there's a large psychology around perhaps the Middle East, that's very important, the violence in Iraq and elsewhere. The psychology around OPEC, that they're giving some sort of not so clear signals about what their intentions are as they used to and there's also problems in the US that have nothing to do with crude, they're related more to gasoline."
- Embargoed: 1st June 2004 13:00
- Keywords:
- Location: BEIJING AND XINJIANG PROVINCE AND SHANGHAI, CHINA; SINGAPORE
- City:
- Country: Singapore
- Topics: Business,International Relations,Energy
- Reuters ID: LVA9J6K7HJBJPLB5OBC9HHFAPEC9
- Story Text: China and Kazakhstan sign an agreement for a multi-billion dollar oil pipeline as China's insatiable energy needs help push oil prices to a 21-year high.
The oil agreement, worth some three billion U.S. dollars, was signed in Beijing on Monday (May 17, 2004) during a visit to China by Kazakhstan President Nursultan Nazarbayev.
The pipeline is the latest in a raft of agreements signed by China aimed at meeting the country's enormous energy needs as the economy booms.
On completion, the 3,000 kilometres pipeline will deliver up to 20 million tonnes of Caspian Sea crude oil to China each year.
China's economic expansion has given a dramatic boost to world oil demand, sucking in crude and refined products from all around the world.
The world's sixth-largest economy but the second-largest power user, endured brownouts across more than half of the country last summer because of power shortfalls.
Unless China's economy overheats, traders expect its fuel demand to keep growing for the next two or three years.
Energy analyst John Vautrain of Purvin & Gertz says this agreement also benefits Kazakhstan.
"It is significant in terms of China's demand, it's perhaps ten percent. But what's more significant about this in my view is that it will help Russia find another outlet or Kazakhstan find another outlet for crude that they are having difficulty transporting to the market,"
said Vautrain.
China's voracious thirst for oil has helped push international oil prices toward record highs.
Chinese oil demand looks set to rise about 20 percent in the first half of this year, says the International Energy Agency.
Concern is growing over China's rapidly expanding economy with fears of overheating that could lead to a bust cycle - and a possible slump in oil prices.
Oil prices paused from a five-session rally on Tuesday (May 18) as some players took profit from this week's run up to 21-year highs on nagging worries that supplies could not meet surging demand.
Vautrain said in Asia only "energy intensive" countries will be affected by the increased oil prices.
"Most of the Asian economies rely on these sources to fuel the economic growth. There are some economies like Japan or Singapore for which this growth is mostly not in the energy intensive or energy consuming sectors but more in services high tech what have you. Energy is a fairly small component. There are other economies like China or India that are growing still into the energy intensive parts of the industry do rely on more energy and those kind of things will be retarded or hurt more," said Vautrain.
Lingering doubts that U.S. gasoline supplies will be sufficient to match peak summer consumption, as well as strong demand for oil from healthy world economic growth have helped push prices to record levels for U.S. crude futures.
Fears of sabotage attacks on oil infrastructure in the vital Middle East, which pumps a third of daily crude output, has added a risk premium on the price of a barrel and traders are worried that the powerful OPEC cartel has little spare capacity to fulfill a pledge to keep the market sufficiently supplied.
OPEC ministers could announce as early as the weekend whether the cartel would raise its supply ceiling.
"Oil inventory levels are actually up and although demand is up, supply levels are up even more, so just given more fundamentals you might expect the price to be softer.
But what's going on I think- there's a large psychology around perhaps the Middle East, that's very important, the violence in Iraq and elsewhere. The psychology around OPEC, that they're giving some sort of not so clear signals about what their intentions are as they used to and there's also problems in the US that have nothing to do with crude, they're related more to gasoline," said Vautrain.
Demand for gasoline in the United States rises to a peak in the summer months when people go on vacation and accounts for about 12 percent of world oil demand. - Copyright Holder: REUTERS
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