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China, Russia near deal on gas imports

China.org.cn, October 12, 2011

• China and Russia made giant strides in energy cooperation on Tuesday by first agreeing on a price for Russian oil exported through a cross-border pipeline and then announcing the approaching "final stage" of work on Russian gas exports to China.

  Premier Wen Jiabao greets Russian Prime Minister Vladimir Putin during a welcoming ceremony in Beijing on Oct 11, 2011. Flanking the two leaders are Vice-Premier Wang Qishan and his Russian counterpart Alexander Zhukov. [China Daily]

  Premier Wen Jiabao and his Russian counterpart Vladimir Putin announced the breakthroughs after co-chairing discussions at the Great Hall of the People.

  "The two countries agreed on crude oil prices and decided to actively push forward cooperation on oil and gas," Wen said at a news conference after a three-hour talks. 

  On January 1 Russia started to supply China with 300,000 barrels of oil on daily basis via the first stage of the East Siberia-Pacific Ocean pipeline. But Russia said China had underpaid it tens of million of dollars due to a tariff dispute.

  The agreement on oil prices was matched by progress on gas.

  "As for gas supplies, we are nearing the final stage of work," Putin told reporters.

  A deal to supply the world's second-biggest economy with up to 68 billion cubic meters of Russian gas annually over 30 years has been suspended due to pricing disagreements.

  Russian gas giant Gazprom and China National Petroleum Corporation signed a framework agreement in 2009. However, Russia seeks around $300 per cubic kilometer, similar to what European countries pay.

  But China wants a price under $200 per cubic meter, similar to what it pays for supplies from Central Asia.

  Yu Sui, a professor of Russian studies with the Beijing-based China Center for Contemporary World Studies, said that before China and Russia reach a compromise on the pirce they should refer to the international price, which has been dropping recently.

  The gap has been narrowed to $50 per cubic meter, as China raised its bid to $250.

  Putin called for compromise on the price, "Those who sell always want to sell at a higher price, while those who buy, want to buy at a lower price. We need to reach a compromise which will satisfy both sides."

  "Natural gas cooperation is one of the most important aspects of bilateral energy cooperation and China will show its utmost sincerity in its negotiations with the Russian side," Wang said at a Sino-Russian energy negotiators' working meeting held in Beijing yesterday.

  Wen said that the Chinese government is willing to , together with the Russians, to build a strategic partnership between the two countries. 

  Many experts and media believed that Putin's China visit is of both economic and political significance.

  Bloomberg said that the trip indicates Putin is likely to lean more on Asia in his foreign policy and develop stronger ties with China if he returns to the presidency in 2012.

  Indian newspaper The Hindu said on Tuesday that "Russia's new emphasis on technological cooperation with China creates both a challenge and opportunity for India.

  "The modernization pact Putin is to sign in Beijing should give India a clue to follow in its relations with Russia," it said.

  But Yu, from the research center, said that other nations do not need to worry about closer ties between Beijing and Moscow as the relations "benefit regional and world peace".

  Guan Guihai, associate dean of the School of International Studies at Peking University, said Putin's visit "should be treated as nothing unusual under the mechanism of regular premier meetings".

  Putin arrived in Beijing a day after Russia and China signed 16 economic and trade deals worth $7.1 billion, mainly in the new energy and mining sectors.

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