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Moscow and Beijing agree to deepen energy co-operation

01.01.70

Published: Wednesday, 22 March, 2006, 08:51 AM Doha Time

BEIJING: Russian President Vladimir Putin and Chinese President Hu Jintao agreed yesterday to deepen energy co-operation, as Russian gas giant Gazprom said it would look to meet some needs of oil and gas-hungry China.
A preliminary deal on new gas pipelines from Russia helped break the ice at a formal document-signing ceremony in Beijing, where earlier this month a top energy planner bluntly criticised Moscow for the lack of progress on agreeing to new supplies.
Putin, who has made energy security the theme of Russias current presidency of the G8 group of industrialised nations, said in November that diversifying energy export routes was a top priority, with supplies to Asia of paramount importance.
Under Gazproms plan, Russian gas will link to both west and east China, with first deliveries envisaged in around five years.
This about diversifying supplies. Today weve defined the time-frame and volumes for Gazproms entry on to the Chinese market. These are major volumes, Gazprom chief executive Alexei Miller said after a relaxed and at times jovial signing ceremony.
Miller said the two pipelines, which will skirt round landlocked Mongolia, would eventually supply 60-80bn cu m of gas a year under the terms of a memorandum signed by Gazprom and CNPC, the Chinese oil and gas conglomerate.
Interfax news agency quoted a source in the Russian delegation as saying the pipelines would cost around $10bn.
Before the meeting, China had complained of Russias resistance to let it invest in Russias booming energy sector, with the biggest prize state-owned oil firm Rosneft.
Putin gave no signals about Chinas chances of owning part of Rosneft, but CNPC appeared to take a big step towards that goal with an agreement to set up a joint venture.
Rosneft president Sergei Bogdanchikov declined to comment but a CNPC spokesman and an industry source familiar with the matter said the two firms planned to build a refinery in China and search for oil in Russia together.
But the much promoted meeting between Putin and Hu produced less progress on Russias plan for a big oil pipeline to the Pacific Ocean, which China is determined should have a southern branch bringing 600,000bpd to its industry.
China has been eyeing Russias vast oil and gas reserves as its dependence on imports has ballooned in recent years, but it has been unable to pin its neighbour down. Russian Energy Minister Viktor Khristenko said a feasibility study was needed first.
Putin and Hu also discussed the international standoff over Irans nuclear plans, which Washington and its allies say are tilted to eventually making atomic weapons.
Moscow and Beijing have deflected Western moves to authorise UN Security Council threats against Iran and urged a negotiated solution. The two leaders agreed to continue seeking to defuse the dispute by political and diplomatic means.
Russia is already a key player in Chinas own nuclear power programme, and it may be looking for more deals. Russias nuclear power chief, Sergei Kiriyenko, also travelling with Putin, plans to extend his trip to travel to the Tianwan plant which Russia is helping to build. Reuters

Expert opinion

Halter Marek

02.12.06

Halter Marek
Le College de France
Olivier Giscard dEstaing

02.12.06

Olivier Giscard dEstaing
COPAM, France
Mika Ohbayashi

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Mika Ohbayashi
Institute for Sustainable Energy Poliy
Bill Pace

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Bill Pace
World Federalist Movement - Institute for Global Policy
Peter I. Hajnal

01.12.06

Peter I. Hajnal
Toronto University, G8 Research Group