06/22/2013, 00.00
RUSSIA - CHINA
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At St. Petersburg Forum, Moscow and Beijing strengthen energy alliance

by Nina Achmatova
Rosneft and CNPC sign mega-deal of 270 billion dollars for the supply of 365 million tons of Russian oil to China over 25 years. Policy of eastward expansion continues in the face of falling demand from European market plagued by crisis.

Moscow (AsiaNews) - China was the protagonist of the International Economic Forum in St. Petersburg, the so-called 'Russian Davos', which from June 20 to 22  brought 4,400 people including heads of government, ministers, journalists, analysts and top managers of major corporations to  the shores of the Baltic Sea. Leading the Chinese delegation was the vice premier, Zhang Gaoli, who met the Russian President, Vladimir Putin, to discuss the implementation of the agreements on trade, investment and energy cooperation, reached during President Xi Jinping'a Moscow visit last March.

The energy sector, with oil in first place, remains the engine of economic and trade cooperation between the two neighbors. Russia already provides significant quantities of crude oil to China and is discussing how to improve the transit capacity of existing infrastructure, in order to increase oil exports.

On the sidelines of the Forum public companies Rosneft and CNPC (China National Petroleum Corporation) signed an agreement for the supply of 365 million tons of Russian oil to Beijing, for a total of  270 billion dollars over 25 years. With an advance payment to Rosneft that is somewhere between 60 and 70 billion dollars.

The number one of the major Russian tycoons, Igor Sechin, a Putin loyalist, said that the mega-contract, one of the largest in the history of oil, provides supplies for 15 million tons a year. With the deal - defined by Putin as "unprecedented" - the agreement between the two majors provides that, beginning in 2015, Rosneft will double oil supplies to China from the current 300 thousand barrels per day to 600 thousand barrels. The initiative is part of a broader strategy of the Russian oil giant's commitment to the East, following the drop in demand in the European market, hit by the crisis.

The Petersburg Forum has confirmed the growing partnership between the Republic of China - the second largest energy consumer in the world - and the Russian Federation - the largest oil producer - whose relations in the energy field never really took off because of differences over prices and logistical issues: most of the reservoirs are located in Western Siberia, and most of its pipeline run to the Old Continent. Analysts have expressed doubt that Rosneft will increase supplies quickly. Pipes will have to be laid from eastern Siberia to Manchuria, in the wake of Skovorodino pipeline, built in 2009. The deposits of eastern Siberia will then have to be developed to gradually take the place of those in the west, already exploited during the Soviet era and being phased out.

The goal is ambitious, but Moscow has every intention of reaching it. At the Forum, Putin joked, "Sechin now spends more time in China than in Russia."

 

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