* Russia turns to Asia as Western sanctions bite
* 38 deals signed during visit by Chinese premier
* Deals include currency swap, energy cooperation
(Adds quotes, details, background)
By Vladimir Soldatkin
MOSCOW, Oct 13 Russia and China signed energy,
trade and finance agreements on Monday proclaimed by Moscow as
proof that a policy turn to Asia is bearing fruit and will help
it to weather Western sanctions over the Ukraine crisis.
The 38 deals, signed on a visit to Moscow by Premier Li
Keqiang, allow for deeper cooperation on energy and a currency
swap worth 150 billion yuan ($25 billion) intended partly to
reduce the sway of the U.S. dollar.
They are among the first clear successes of the eastward
shift, ordered by President Vladimir Putin to avoid isolation
over the sanctions, since the vast nations reached a $400
billion, 30-year natural gas supply agreement in May.
"I consider it important that, in spite of the difficult
situation, we are opening up new possibilities," Russian Prime
Minister Dmitry Medvedev said after the signing ceremony.
In a sign that mistrust has still not been completely
buried, Li was less effusive, even when holding out the prospect
of a deal in 2015 to build a second pipeline along what is
called the Western route to ferry Russian gas to China.
"Cooperation over natural gas between Russia and China goes
back quite a long way," Li said. But he added: "Further
discussion is needed between companies."
For Russia, the agreements offer some relief, with the
European Union and the United States showing no signs of lifting
sanctions imposed over Russia's annexation of the Crimea
peninsula and its backing of separatists in east Ukraine.
The sanctions target the finance, energy and defence
sectors, restricting some state firms' and banks' ability to
raise financing in Western markets.
The currency swap strengthens China's plans to promote
international usage of the yuan following pledges by
Moscow and Beijing to settle more bilateral trade in roubles and
yuan. Spurred by their often fraught relations with the United
States, Russia and China have long advocated reducing the role
of the dollar in international commerce.
China, which has 32 percent of its $4 trillion foreign
exchange reserves invested in U.S. government debt, would like
to cap its vulnerabilities to any fluctuations in the dollar in
the near term. Over the longer term, it wants to increase the
yuan's clout and turn it into a global reserve currency.
EASTWARD SHIFT IN OIL SUPPLIES
Medvedev said trade turnover between Russia and China had
grown by more than 100 percent over the past six years from $40
billion to $90 billion.
"We are very close partners," he said, although trade with
the combined 28 nations of the EU is greater than with China.
Under the new agreements, cooperation will deepen between
state oil producer Rosneft and China National
Petroleum Corporation, including in liquefied natural gas (LNG)
projects and possibly LNG supplies to China.
Banks VTB, VEB and Russian Agriculture Bank - like
Rosneft hit by sanctions - signed framework agreements with
China Exim bank to open credit lines.
Mobile phone operator MegaFon and China Development Bank
agreed to arrange financing of $500 million.
Li, who arrived from Germany and will go on to Italy for a
summit of European and Asian leaders later this week, is
expected to hold talks with Putin on Tuesday.
Another sign that Russian ties with Beijing are improving
was the release of energy ministry data showing crude oil
supplies to China rose in January-September by almost 45 percent
year-on-year. Shipments from the Baltic Sea port of Primorsk
towards Europe fell almost 20 percent.
"Much greater changes can be seen in the geographical
distribution of these shrinking exports, with flows to the West
clearly losing out against prioritised links to the Far East, a
trend that could easily be accelerated further in the current
political climate," JBC Energy consultancy said in a note.
Beijing has made clear it wants to increase business with
Russia and cash in on the crisis in relations between Moscow and
the West, now at their worst level since the Cold War.
But time will be needed to end mistrust in relations between
countries that almost went to war in a border dispute in the
1960s, when Russia was part of the Communist Soviet Union.
Beijing is interested in investing in infrastructure, energy
and commodities in Russia, but Moscow long had reservations
about allowing Chinese investment in strategic industries.
China may also have worries about investing in an economy
that is stuttering, with the rouble hit by sanctions and a drop
in the price of oil, Russia's most important export commodity.
(1 US dollar = 6.1250 Chinese yuan)
(Additional reporting by Katya Golubkova, Denis Pinchuk, Lidia
Kelly and Alexander Winning in Moscow and by Gui Qing Koh in
Beijing; Writing by Timothy Heritage; editing by David Stamp)