Russia, China Complete Oil Pipeline

Sept. 27, 2010
China will receive oil for 20 years in exchange for $25 billion in loans.

The leaders of China and Russia celebrated on Sept. 27 the completion of a cross-border oil pipeline, a symbol of growing ties between the two emerging economic powers, particularly in the energy sector.

Visiting Russian President Dmitry Medvedev and his Chinese host President Hu Jintao attended a launch ceremony for the long-awaited pipeline linking the world's biggest oil producer with the largest energy consumer. The deal reached last year -- which will see China receive oil for 20 years in exchange for $25 billion in loans -- is a "milestone" for energy cooperation between the two neighbors, Hu said.

The countries are still finalizing a deal that could see 70 billion cubic meters of Russian natural gas sent to China each year, and have also announced plans to jointly build a $5 billion oil refinery in northern China.

The deal on the oil pipeline -- which runs from eastern Siberia to the northeastern Chinese city of Daqing -- is part of efforts by Moscow to seek new markets for its crude exports, especially in fast-growing Asia. Beijing is also looking to secure much-needed resources to fuel its booming economy, now the second largest in the world behind the United States.

Nikolai Tokarev, head of the Russian oil pipeline monopoly Transneft, said commercial supplies from the pipeline would begin from January 1, and that 15 million tons of crude would initially reach China each year.

Russia's Gazprom, the world's largest gas producer, signed a framework agreement with China National Petroleum Company (CNPC) last year on shipments of natural gas to China, but the two sides have yet to sort out a pricing deal.

Russian Deputy Prime Minister Igor Sechin, the country's powerful energy czar, said the agreement would be finalized by mid-2011, with the first deliveries in 2015. "Cooperation between Russia and China in the gas sphere is strategically promising. In this sense, Russia is a natural partner for China," Sechin said.

The two leaders signed a series of economic and political agreements, including pacts on cooperation in future gas supplies, energy efficiency, renewable energy, nuclear power and the prevention of illegal fishing. Medvedev -- who also met China's Premier Wen Jiabao -- said the documents would give a "new impetus" to the Sino-Russian relationship. Energy supplies account for the bulk of Sino-Russian trade but Moscow also wants to secure Beijing's help in modernizing the Russian economy and is seeking broader Chinese investments and know-how in various sectors.

Trade between Russia and China totaled $25.5 billion in the first six months of this year, according to official data.

Copyright Agence France-Presse, 2010

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