(Repeats to more subscribers)
* Russia gets new Asian route for its oil exports
* Seeks closer China relationship to offset Europe
* Also plans to export 30 bcm gas per year to China from
* Russia hopes to sign "commercial contracts" on gas
(Adds quotes, details)
By Denis Dyomkin
BEIJING, Sept 27 Russia and China took a step
toward a closer energy relationship on Monday as they prepared
to open a pipeline that will bring Siberian crude oil to China,
but failed to finalise pricing for a similar pipeline for gas.
Russia is rich in energy resources but burdened with
pipelines that lead west -- despite European fears of Russian
dominance, Russian officials have often complained the country
is a hostage to Europe's willingness to keep buying.
A branch of the new East Siberian-Pacific Ocean (ESPO)
pipeline is set to start bringing 300,000 barrels per day
across the border on Jan. 1, 2011, giving Russia a new oil
Russian President Dmitry Medvedev and his Chinese
counterpart Hu Jintao attended a ceremony to mark the
completion of the Chinese branch of the pipeline on Monday.
China will start testing its section at the end of October
and Russia will begin test-pumping about 600,000 tonnes of oil
in November or December, according to Chinese and Russian
The Chinese branch is a spur of a larger pipeline that will
eventually send oil to Russia's Pacific coast, a design long
seen as an attempt by Russia, the world's largest oil exporter,
to counterbalance China with other buyers, such as Japan, as a
market for its energy in the east.
Map of the ESPO pipeline:
FACTBOX on China-Russia energy ties [ID:nSGE68Q07Z]
FACTBOX on Russia's ESPO pipeline to China [ID:nTOE68Q04I]
Gas, geopolitics in play in Mededev's trip [ID:nLDE68M0RN]
Russia, China to build $5 bln refinery [ID:nLDE68K024]
Medvedev did not clinch a deal on gas pricing, however, the
vital element that would allow the world's top gas exporter to
sell to the fast-growing Chinese market.
The development of vast Russian fields in east Siberia over
the past decade, partly financed by China, has allowed Russia
to create a northeast Asian oil-trading hub that connects it to
the world's three largest consumers -- the U.S., China and
"The future is Asia, that is really where the growth is and
that is why (Russian Prime Minister Vladimir) Putin emphasises
the importance of this project," Eurasia Group oil analyst Greg
"Russia's infrastructure had so far focused on Europe, and
the improvement in infrastructure to Asia is driven by global
GAS PIPELINE FACES PRICE HURDLE
While China's ties with Japan have deteriorated sharply
over territorial disputes, Beijing and Moscow have settled the
border disagreements that long plagued their relations and
almost sparked a war in 1969.
Now Russia and China are trying to put flesh on the bones
of mutual promises to expand cooperation in trade, energy and
They were only partly successful on Monday, and repeated a
past pattern of talking up hopes while falling short on many
A gas pricing deal wasn't announced, but Russian gas export
monopoly Gazprom GAZM.MM said it had cemented terms for a
supply deal to sell 30 billion cubic metres (bcm) to China
National Petroleum Corp annually from end-2015.
"We expect commercial contracts by the middle of 2011,"
Russia's Deputy Prime Minister Igor Sechin told reporters.
"Practically, there are no limits for the growth of gas
consumption in China," said Sechin, who is chairman of Russian
oil giant Rosneft (ROSN.MM) and oversees the country's energy
and metals industries. "Secondly, Russia has all the gas needed
for China's economic development."
"All elements of partnership are being considered:
infrastructure, routes, deposits, shipments and cooperation in
the financial sphere."
China also contracted Russia's Atomstroiexport to build two
more reactors at the Tianwan nuclear power plant, one of a
score of facilities being built or expanded in China's rapid
shift into alternative energy.
China is planning to double the share of gas in its energy
mix over the next decade as part of a wider drive to wean its
booming economy off coal, the cheapest but dirtiest fossil
Russia, which has the world's biggest gas reserves, is keen
to diversify its exports away from Europe by building pipelines
and selling gas overseas in the form of liquefied natural gas.
Medvedev's predecessor as Russia's president, the current
Prime Minister Vladimir Putin, agreed in 2006 to build two
pipelines to China, exporting 68 billion cubic metres of gas
But the failure to reach an agreement on pricing has
stymied progress, despite the huge potential of Russian supply
and Chinese demand.
And in the intervening four years, China has rapidly locked
in competing supplies -- piping it from Central Asia, importing
LNG and investing in new ways of finding it on its own
Domestic gas production has almost doubled to around 7.5
bcm per month and next year China will get 17 bcm via a
pipeline linking Turkmenistan, Uzbekistan, Kazakhstan and
China, which is even longer than the planned ESPO pipeline.
(Additional reporting by Alejandro Barbajosa in SINGAPORE and
Chris Buckley in BEIJING; Writing by Tom Miles; Editing by Ken
Wills and Don Durfee)