Russia and China sign energy package…

Tags: Commentary, Russian-Chinese relations, Politics, World, Russia

Russia and China have signed a package of agreements on cooperation for the next 20 years. The package is seen as one of the major results of President Medvedev’s visit to China. On Monday the Russian and Chinese leaders signed an oil supplies contract and agreed on the terms of gas supplies and the construction of two more nuclear power generation units in China.

President Medvedev and the Chinese leader Hu Jintao attended a ceremony to launch the Chinese section of an oil pipeline from East Siberia into China which will start pumping oil in January next year. The pipe saves China the trouble of transporting oil by rail, guarantees export volume at a stable 15 million tons per year and makes it possible to increase the supplies twofold, to 30 million a year, though this is not going to be easy. Nikolai Tokarev, the President of the “Transneft” Operator Company, explains:

“Technologically, the pipeline has every capacity to double the supplies but it cannot be done in a day, it will take time.”

The price for gas was central on the agenda of the talks. China does not want to buy gas at an average European price. The two sides have reached no deal on gas prices but agreed to settle the issue and sign gas supplies contracts by the middle of next year. Russia’s Vice-Premier Igor Sechin has this to say:

“As for the gas contracts, Russia and China considered all aspects of cooperation, including the infrastructure, the routes and different gas fields and supply sources. And they discussed financial issues too. Should the two sides manage to clinch a deal on them all, which they will, I have no doubts about it, supplies of Russian gas into China will start in 2015.”

An agreement on the terms of gas supplies signed by Russia’s Gazprom and the Chinese Oil and Gas Corporation on Monday provides for the construction of two pipelines, each with a capacity of 63 billion cubic meters a year, which corresponds to the amount of gas supplied via the South Stream pipeline from Russia into Southern Europe. Russia and China also came to agreement on the sensitive issue of minimum purchase amount which is key to Russia’s talks with western partners.

Russia is interested in developing oil and gas fields in Siberia to diversify its exports and win new markets. The recent agreements with China are a step in this direction. The United States, South Korea, Japan and China are already buying Russian oil and gas. And up to ten countries of the Pacific Rim are on the waiting list.

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