China Russia Energy New Chess Game: Oil For Loan After March Landing

On the afternoon of September 27th, the Great Hall of the people in Beijing.

Chinese President Hu Jintao and visiting Russian President Medvedev pressed the completion button together.

In addition to the ceremonial node of the completion of the oil pipeline, during the three days of Medvedev's visit, China and Russia signed agreements covering oil, natural gas and nuclear energy in the field of energy cooperation.

As president Hu Jintao said after the ceremony, "China and Russia"

The main outcome of the negotiations was the signing of a contract between CNPC and Rosneft on the supply of oil to China through the "Slovo" Daqing oil pipeline.

Crude oil from Russia will be imported into Daqing's Lin Yuan refinery starting in January 1, 2011.

The pipeline will deliver 15 million tons of crude oil to our country every year in the next 20 years.

Negotiations on natural gas are hampered by price.

The price acceptable to the Chinese side is US $150 per thousand cubic meters, while Russia hopes US $500 per thousand cubic meters.

At the same time, China and Russia also signed the technical design contract for the construction of generating units No. three and No. four of Tianwan nuclear power station.

Another obvious sign of the upgrading of Sino Russian energy cooperation is the large number of energy giants in the Russian delegation.

This unprecedented nearly 500 Chinese delegation has covered almost all the major industrial sectors in Russia, with the largest number of delegations in the energy field.

In addition to Xie Qin, the first deputy prime minister in charge of energy, energy minister Gao Matko, Rosneft, Gazprom, Transneft, Luke oil and Russia's nuclear industry group (Rosatom) also gathered in Beijing.

Oil supply to China from 2011 onwards

As the largest bilateral project between China and Russia, the Sino Russian "East Siberia Pacific" oil pipeline China branch has been completed on schedule after a year and a half of construction.

According to the oil pipeline design, construction and operation agreement signed by PetroChina and Transneft in February 2009, the Sino Russian oil pipeline starts from the Russian "East Siberia Pacific" oil pipeline Skou Volo Zino pmission station, which is imported from Mohe County, Heilongjiang, China, and is terminus in Daqing by 13 cities and counties in Heilongjiang and the Inner Mongolia Autonomous Region.

The total length of the pipeline is 999.04 km, of which 72 km in Russia and 927.04 km in China.

In April 27, 2009, the pipeline started in the territory of Russia, and the pipeline in China started construction in May 18th of the same year.

As the heads of state of China and Russia press the "completion button" together, the oil from the Russian oil field will be imported into Daqing's Lin Yuan refinery since January 1, 2011.

According to the agreement on "oil for loan" reached between China and Russia, China will provide Russia with a total loan of 25 billion US dollars over the long term. Russia will use oil as a pledge to repay loans by oil supply. From 2011 to 2030, according to the scale of 15 million tons per year, China will supply 3 billion tons of oil to China through pipelines.

And this pipeline will deliver 15 million tons of crude oil to our country every year in the next 20 years.

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Razov, a Russian ambassador to China, said in an interview with our reporter that the Sino Russian oil pipeline is an important part of the oil cooperation between the two countries.

In his view, the oil cooperation agreement between the two countries is a package agreement covering three aspects: one is to build relevant oil pportation pipelines; second, the two sides deliver crude oil from Russia to China in accordance with the agreed number and price; third, the two sides have extensive cooperation in the upstream and downstream of the oil industry chain, including the exploration and exploitation of crude oil in the two countries, and the joint venture in Tianjin, China, to carry out oil refining and petroleum processing cooperation.

As PetroChina and Rosneft signed the supply contract for the supply of oil to China in September 26th, the pipeline construction and fuel supply have entered the implementation stage. "Daqing"

According to a negotiators, the next stage of Sino Russian oil cooperation talks will focus on the upstream and downstream cooperation.

China Russia orient Petrochemical (Tianjin) refinery is undoubtedly the most important node in the next stage of negotiations.

As the "front stop" of this visit, Vice Premier Wang Qishan of the State Council and Russian Vice Premier Xie Qin have held the sixth meeting of energy negotiators between China and Russia in Tianjin in September 21st.

According to the foregoing sources, the main source of the talks is oil sources in the Tianjin refinery.

According to the earliest signed "oil for loan" agreement, 15 million tons / year crude oil pported to China through the Sino Russian oil pipeline was originally sent to Tianjin refinery for refining.

However, since the pportation contract started in 2011, the construction of Tianjin refinery is expected to end until 2015, so after several rounds of negotiations, China and Russia agreed to pfer crude oil pported to Daqing and Liaoyang refineries.

This makes the oil source of Tianjin refinery, which is finally determined to be 13 million tons of output, an open question.

According to the aforementioned sources, in the round of negotiations started in September 20th, the two sides "negotiated overnight" on the issue of oil sources, but not until the 21 day of the founding of the refinery.

"The current progress is that most of the 13 million tonnes of Tianjin refinery capacity will be pported from Russia through railway, land and sea pportation, while the other part of crude oil will probably come from Saudi Arabia."

In September 21st, the two sides signed a summary of cooperation, and the Tianjin refinery laid the foundation on schedule.

The new round of negotiations will continue again in mid October.

Natural gas prices diverge

In the last stage of the cooperation negotiations in the oil field, cooperation negotiations in the field of natural gas have also been developing rapidly.

As a major producer of natural gas, Russia has attached great importance to the negotiations on natural gas with China. The negotiating team of 60 people from Gazprom has been stationed in Beijing since mid September, and has been negotiating almost day and night.

Xie Qin told reporters in Beijing in September 27th that at present, Gazprom has signed a document on CNPC's basic conditions for supplying gas to China.

The document says that at present, China and Russia have agreed on the main conditions for the supply of Russian natural gas to China.

If the two sides reach an agreement on all issues, Russia can start pporting natural gas to China from 2015.

According to the preliminary agreement reached between the two sides, Gazprom will provide 70 billion cubic meters of natural gas to China every year, including 30 billion cubic meters of west line pipeline and 38 billion cubic meters of east line pipeline.

Among them, due to technical funds, the west line pipeline will be completed before the eastern pipeline before 2015.

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Gazprom also announced after the 21 energy negotiator met that the two sides have agreed on the key indicators and parameters of natural gas supply to China, including pipeline pportation capacity, supply, supply period and payment conditions.

However, the only problem that has yet to be settled is the price of gas supply, which is the core issue of cooperation.

Although Xie Qin is optimistic that the Sino Russian gas supply business contract may be signed before the middle of 2011.

However, the gap between China and Russia in natural gas prices is still an indisputable fact.

China Petroleum negotiators told reporters that price will be the focus of next stage negotiations.

At present, the price acceptable to China is $150 per thousand cubic meters under the condition of capital construction of natural gas pipelines.

Because this price refers to the price of the current China Turkmenistan gas agreement.

Russia hopes to complete its pricing of China's natural gas according to its export price mechanism to Europe.

Data show that Russia's exports of natural gas to Europe generally fluctuate with the price of oil in accordance with the agreement price.

At the end of 2008, the price even approached $500 per thousand cubic meters.

Aforementioned PetroChina stakeholders said that due to the high psychological gap, the negotiations on natural gas prices would be a tough negotiation.

Because Russia faced financial crisis with the signing of the Sino Russian oil cooperation agreement, the situation of urgent need of cash is different. At present, Russia does not have a capital crisis that needs to be solved urgently.

While China has successfully launched cooperation with the Central Asian region in the field of natural gas, chips have also increased at the negotiating table.

"However, cooperation in the field of energy is not a purely commercial cooperation, but involves the strategic level of the two countries, so the prospects for negotiation are still expected."

In September 27th, the Jiangsu Nuclear Power Corp and the Russian nuclear construction export company signed the technical design contract for the construction of No. three and No. four generating units of Tianwan nuclear power plant (phase two).

Following the completion of the cooperation between China and Russia on the 1st, No. two generating unit (phase I), cooperation will continue to expand to the two stage.

The general contract for the construction of Tianwan nuclear power plant was signed in December 29, 1997.

Sergei Kiriyenko, President of Rosatom, told reporters that Russia will start building the No. three or four generating unit of Tianwan nuclear power plant in 2011.

The contract for technical design of Tianwan Nuclear Power Plant No. three or four will be signed by the end of this year.