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Russia values China oil deal at USD 270 billion over 25 yrs

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AFP Saint-Petersburg
Last Updated : Jun 21 2013 | 3:40 PM IST
A huge deal set to be signed by Moscow and Beijing for Russia to supply oil to China is worth $270 billion over 25 years, the chief executive of Russian oil giant Rosneft said today.
Igor Sechin, a top ally of President Vladimir Putin, told reporters that the deal, would involve the delivery of 365 million tonnes of oil over 25 years with a total value of USD 270 billion (204 billion euros).
Speaking at Russia's annual economic forum in Saint Petersburg, he said that deliveries could start as early as this year.
Sechin did not give further details but the daily Vedomosti said the deal was a contract between Rosneft and Chinese state energy firm CNPC that was foreseen by an agreement signed during a visit to Moscow in March by Chinese President Xi Jinping.
That agreement pledged gradually to raise Russian oil supplies to China over the next 25 years from their current level of 15 million tonnes per year.
The oil in the USD 270 billion deal would be delivered to China from the existing Eastern Siberia-Pacific Ocean (ESPO) oil pipeline that would pump the oil direct into the Chinese region of Mohe.

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According to some reports, the deal could be signed on Friday at the Saint Petersburg forum.
Putin had said the day earlier at talks with Chinese Vice Premier Zhang Gaoli that agreement had been reached on the oil supply deal. He said it was worth USD 60 billion but spokesman Dmitry Peskov told Vedomosti that this referred only to the first instalment.
According to Vedomosti, China would make an up-front payment of USD 65 billion.
Putin has made a priority of stabilising Russia's sometimes prickly relations with its giant eastern neighbour at a time when its ties with the West are becoming ever more problematic.
Russia wants to diversify its base of energy customers away from Europe and is aware it has not fully exploited the colossal potential of the Chinese market.
Moscow also needs to finalise a potentially huge gas deal with China but a commercial contract has so far proved elusive as talks have become mired in pricing disputes.

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First Published: Jun 21 2013 | 3:40 PM IST

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