ASTANA: Kazakhstan hopes to start working on further pipeline capacity expansion to China this year, the head of its oil pipeline monopoly said on Monday, a move that would weaken Russia's position in the Central Asian crude market.
Kairgeldy Kabyldin, the chief of KazTransOil, said th ex-Soviet republic would boost oil exports eastwards to energy-hungry China by one-fifth to 12 million tonnes this year and it hopes to further increase capacity.
"We hope to start implementation (of the pipeline expansion) to 20 million tonnes this year," he said, without spelling out a possible time frame.
Kabyldin said existing annual China-bound pipeline capacity was 14 million tonnes. Customs data show the former Soviet republic sent over 10 million tonnes (200,000 barrels per day) of pipeline oil to China in 2012.
Kabyldin said that "certain talks" were under way to increase oil supplies to China from Kazakhstan. Rosneft , Russia's top crude producer, has also been in touch with China about increasing oil flows in exchange for a loan.
This year, Kazakhstan reversed flows along the existing 450 km (280 miles) link from Kenkiyak in western Kazakhstan to the Caspian port of Atyrau in order to pump oil east instead of west.
Kazakhstan expects a jump in output later this year when production starts at one of the world's largest oilfields, Kashagan, by a group of majors including Exxon Mobil and Royal Dutch Shell.
Russia, the world's largest oil producer, has been the main transit route for crude from Kazakhstan since the 1991 collapse of the Soviet Union. Russia has taken flows of around 300,000 barrels per day through Transneft, its state-controlled pipeline monopoly.
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