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Russia and China Promise Energy Cooperation

Posted on: Tuesday, 21 March 2006, 06:30 CST

By Tom Miles

BEIJING -- Russian President Vladimir Putin and Chinese President Hu Jintao agreed on Tuesday to deepen energy cooperation, as Russian gas giant Gazprom said it would look to meet some of China's frustrated energy needs.

Putin, who has made energy security the theme of Russia's current presidency of the G8 group of industrialized nations, said in November that diversifying energy export routes was a top priority, with supplies to Asia of paramount importance.

But China's top energy planner, Zhang Guobao, has called the slow movement in Russian plans for new pipelines "regrettable" and criticized the Russian government's unwillingness to support Chinese efforts to invest in Russia's energy sector.

Putin arrived in Beijing on Tuesday accompanied by Russia's top energy chiefs, including the chief executive of Gazprom, Alexei Miller. China's Xinhua news agency said the two sides signed three deals on oil and natural gas cooperation.

Miller told reporters two pipelines from Russia would eventually supply China with 60-80 billion cubic metres of gas a year. He said Gazprom had signed a memorandum on gas supplies with CNPC, the Chinese oil and gas conglomerate.

Details of the gas deal were not available, but it may go some way to mollifying Chinese leaders, who have signaled their frustration at a lack of progress in boosting Russian oil and gas imports. But the much promoted meeting between Putin and Hu produced only broad agreement about energy cooperation.

"We support investment in both countries to develop oil and gas resources and the energy potential of Russia and China," the two sides said in a joint statement issued after they met.

"The energy organizations and companies of both countries will continue active work to advance oil and gas pipeline projects."

China has been eyeing Russia's vast oil and gas reserves as its dependence on imports has ballooned in recent years, but it has been unable to pin its neighbor down.

Also accompanying the Russian leader were Energy Minister Viktor Khristenko and Resources Minister Yuri Trutnev, as well as Sergei Bogdanchikov, the head of state oil firm Rosneft.

NO SIGNS OF MAJOR BREAKTHROUGH

China wants Russia to firm up a possible 30 million tonne per year (600,000 barrel per day) oil pipeline deal as well as natural gas supplies to feed its booming economy.

But there were no indications of a major breakthrough in Putin's meeting with Hu. Khristenko said on Tuesday there could be no movement forward on an oil pipeline to China until there had been a feasibility study.

Asked if there was any date for the building of the pipeline, he said: "We will only be able to answer that once we've done the feasibility study.

"We intend to build it. There is nothing forbidding it, but first there should be a feasibility study according to the rules."

Putin and Hu also discussed the international standoff over Iran's nuclear plans, which Washington and its allies say are tilted to eventually making atomic weapons.

Moscow and Beijing have deflected Western moves to authorize U.N. Security Council threats against Iran and urged a negotiated solution, and the two leaders agreed to continue seeking to defuse the dispute "by political and diplomatic means."

China has backed a Russian compromise proposal that would allow Iran to use nuclear fuel enriched in an internationally monitored plant on Russian soil, easing fears that Tehran could divert atomic material to weapons development.

Russia is also participating in six-party talks, hosted by China, aimed at ending North Korea's nuclear ambitions but which have been repeatedly delayed.

Russia is already a key player in China's own nuclear power program, and it may be looking for more deals. Russia's nuclear power chief, Sergei Kiriyenko, also traveling with Putin, plans to extend his trip to travel to the Tianwan plant which Russia is helping to build.

China has said Russia's continued involvement at Tianwan, in the eastern province of Jiangsu, depends on the strength of its work on the first two generating units, which are due to go on stream toward the end of this year.

China plans to build 27 nuclear plants in the next 15 years and Russia intends to tender for every project, Itar-Tass news agency reported after a briefing by Kiriyenko last week.

Russia, which plans 40 new nuclear plants on its own territory by 2030, also wants to offer re-processing facilities to developing countries, enabling them to gain nuclear power while removing material that could be used for making weapons.

(RUSSIA-CHINA; Editing by Chris Buckley and Nick Macfie; tom.miles@reuters.com; Reuters messaging: tom.miles.reuters.com@reuters.net; Phone: +7 495 775 1242))

Source: REUTERS

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