By Li Hongmei
Russia signed a slew of deals with China yesterday, including a US$85 billion deal to supply oil to China, visiting Prime Minister Dmitry Medvedev said, expanding energy trade between the giant neighbors.
The two governments also agreed to jointly construct an oil refinery in Tianjin, east of Beijing, Medvedev said during an online forum with Chinese Internet users. Medvedev said Russia's biggest oil producer, Rosneft, will supply China another 70 million barrels of crude a year for 10 years under the latest agreement.
The agreement "testifies to the fact that we have reached a higher and a brand new level of cooperation," Medvedev said.
China is the world's fastest-growing energy market. US government data shows it overtook the United States in September as the biggest oil importer, driven by rising auto ownership and strong economic growth.
Russian energy companies operate two pipelines to move oil to China and one to deliver gas. China imported 170 million barrels of oil from Russia in 2012, according to Xinhua news agency.
The Tianjin refinery will have an annual capacity of 110 million barrels, Medvedev said. It will be built by state-owned China National Petroleum Corp, which will own 49 percent, and Rosneft, which will own 51 percent. In June, the two companies signed an agreement for Russia to supply 2.5 billion barrels of oil valued at about US$270 billion to China over the next 25 years.
In a separate deal, Novatek agreed to supply 3 million tons per year of LNG to CNPC, one of the partners in its US$20 billion project on the Arctic Yamal peninsula.
The deal covers a period of 15 years, with pricing linked to the so-called Japanese crude cocktail, a benchmark based on oil prices.
Yamal LNG, being developed by Novatek, Total and CNPC, is scheduled to start producing LNG in 2016 and supply 16.5 million tons per year of the tanker-shipped fuel by 2018.
Also yesterday, Gazprom, the world's largest gas company, said that it had reached an agreement on a price formula to supply 38 billion cubic meters per year of gas by pipeline to China. Yet final price terms were not agreed, meaning talks are likely to run into 2014.
Speaking after the deals were signed, Chinese Premier Li Keqiang said: "Commercial cooperation is extremely important and must not be put off.
"We reached many new consensuses on further advancing practical cooperation, especially on large-scale projects," Li told reporters after the 18th regular meeting between the Chinese and Russian leaders held at the Great Hall of the People in Beijing.
"Energy cooperation between China and a third party will not affect the cooperation between China and Russia," Li said, adding that the China-Russia energy cooperation is of long-term strategic significance.
"We both think that business cooperation plays an irreplaceable role and there is even more immense potential for it," Li said.
Li said he is confident the two countries will fulfill the US$100 billion trade target in 2015.
Medvedev told reporters that the two heads of government agreed to innovate means of economic cooperation and step up mutual investment between the two countries.
