LONDON — A pipeline set to join China’s energy demand with Russia’s oil supply will spur production and spark refinery construction and could greatly reduce Beijing’s need for crude from elsewhere.

Russian crude imports to China in the second quarter of this year rose by 30 percent from the first three months to average 346,692 barrels per day, a 37 percent rise year on year.

Currently, Russian oil flows to China via rail or ship, and until the East Siberian-Pacific Ocean pipeline is completed next year and a spur begins bringing in a predicted 300,000 bpd of Urals crude in 2012 it will lag while cheaper options are preferred.

“China is trying to take advantage of falling crude prices in order to go into countries and secure access to fuel supplies to meet future need,” said Thomas Grieder, an analyst at IHS Global Insight.

“Russia’s supplies to China are a small fraction of the overall picture right now,” Grieder said. “For crude from Russia, the future is the pipeline.”

Chinese state oil firms have been tasked with securing energy supplies to fuel the economy, and in May China said it was boosting refined state fuel reserves to 10 million barrels by 2011.

“The Chinese will buy the cheapest grades available at the time, so it is about arbitrage economics. They will not buy Urals at any cost,” said David Wech at JBC Energy in Vienna.

Russia has seen its benchmark crude Urals rise to record strength as OPEC cuts have increased demand for the sour grade also known as REBCO, short for Russian export blend crude oil.

Last year in June, Russian Urals in the Mediterranean was $5.47 cheaper per barrel on average than dated Brent. On Aug. 20 this year, the differential had narrowed to 46 cents.

“Urals isn’t the most convenient grade for the Chinese, but buying could rise in the future in line with increased demand. I think they will take grades like Urals at the right price, especially with the new level of refineries,” a physical oil trader said.

Asia’s top oil and gas company PetroChina has begun expanding its Liaoyang refinery in northeastern China to prepare for more Russian oil imports, aiming for a 2010 completion ahead of the ESPO flows.

Most of Russia’s new fields in eastern Siberia will go to China via the ESPO but not until 2011, when a 20-year agreement comes into effect.

In the last year, Russian oil companies have tapped new fields at Talakanskoye, Verkhnechonskoye and Uvat, although overall Russian output declined 0.7 percent to 488 million tons as western Siberia produced less.

On Friday, Prime Minister Vladimir Putin is set to attend an opening ceremony for the Vankor oil field in eastern Siberia. Once up and running, it should supply ESPO, which will also run to the Pacific Ocean and provide oil for Japan, with 25 million tons annually.