The only thing that has been decided is that the 3,000 km pipeline between the two countries will terminate in Dushanzi city in the northwestern Xinjiang region.

CNPC and Kazakhstan’s state-owned oil company, KazMunaGaz, have agreed to complete the Kazakhstan to China pipeline project by 2006 and, once completed, the pipeline would have an initial transmission capacity of 20 million tonnes of oil per annum. The Kazakh crude would be refined at CNPC’s Dushanzi Petrochemical Corp, before being routed into China.

Here now lies the problem, where exactly into China should the oil go? As an unnamed CNPC official said it, “We haven’t quite finalised the domestic route (from Xinjiang to other parts of the country).”

The two choices are, to pipe the oil to Chengdu, in the Sichuan province or to transport to Henan in central China. Sichuan seems to be the one that CNPC is leaning towards as it would have “an annual transmission capacity of 8 million to 15 million metric tonnes/year and China doesn’t have any major refinery in Sichuan and the demand there for oil products is growing very fast,” said the CNPC man.

Henan is deemed the least likely option as the market there it is dominated by CNPC’s chief rival, or Sinopec Corp. However, the CNPC official was quick to point out that “this option would allow CNPC to raise its oil products market share in eastern China, because the pipeline to Henan would likely be extended to cities in the East if this route was chosen.”