Russia, China to step up oil cooperation
Tuesday May 27, 11:56 am ET
By Jeremy Page
MOSCOW, May 27 (Reuters) - Russia and China agreed on Tuesday to strengthen cooperation in the oil and gas sectors, including construction of a huge oil pipeline to allow Russia to boost exports and help China diversify imports.
Russian President Vladimir Putin and Chinese President Hu Jintao signed a declaration in the Kremlin saying the energy partnership between the world's second largest oil exporter and the world's most populous nation was a priority.
"This strengthening must be based on large oil and gas projects, including construction of the Russia-China oil pipeline, and deliveries of natural gas to China," the declaration said.
The text represents a key element of support for Russia's oil major YUKOS (YUKO.RTS), which has masterminded the pipeline and plans to ship 400,000 barrels per day to China's Daqing from 2005, rising gradually to 600,000 bpd.
The document casts further doubt over rival plans by Japan to import large volumes of Russian oil in the near future, as Russian officials have said their country lacks sufficient oil resources to justify two huge pipelines to the east.
"I think the main aim of the visit was to reduce political risks by calling for more confidence between the two states," said oil analyst Valery Nesterov from Troika Dialog brokerage. "In this sense, the declaration definitely moves implementation of the pipeline a step closer."
Russia's oil output is booming for the fifth straight year and the country is looking for more export routes outside its traditional European market.
China, the world's third largest oil importer, depends heavily on supplies from the Middle East, but is trying to diversify its sources away from the volatile region.
Nesterov said he now expected the Russian government to approve the pipeline implementation very shortly, which would mean the state pipeline monopoly Transneft could start construction within months.
The head of Transneft, Semyon Vainshtok, who recently reversed his long-standing opposition to the pipeline project, told reporters he expected the government to take a decision on the issue within two weeks.
Industry sources said earlier the final deal between the crude seller YUKOS and oil importer China National Petroleum Corporation (CNPC) on purchase guarantees could be signed in the framework of the two leaders' talks in Moscow.
CNPC's President Ma Fucai told Reuters he also expected the deal to be finalised shortly, but declined to give details.
"We still need to work some things out. It will be signed soon," he said.
Chinese Foreign Ministry spokesman Kong Quan told reporters the Chinese and the Russian governments backed the deal, but the Russian side wanted more time to study the project. |
