China, Russia stuck on gas deal pricing

PUBLISHED : Friday, 17 June, 2011, 12:00am
UPDATED : Friday, 17 June, 2011, 12:00am


China and Russia failed to finalise a gas supply deal in time for their leaders' summit in Moscow yesterday, but President Hu Jintao stressed the importance of energy co-operation between the countries after meeting with Dmitry Medvedev, his Russian counterpart.

'Co-operation in energy is a key area in practical co-operation between China and Russia,' Hu told reporters after the meeting at the Kremlin Palace. 'Both sides are willing to keep pushing forward this co-operation on a mutually beneficial, win-win basis.'

After five years of negotiations, officials on both sides expressed optimism last week that a deal would finally be sealed before Hu reached Moscow, but differences over pricing reportedly kept an agreement out of reach.

Russia's Gazprom, the largest extractor of natural gas in the world, said China should pay a tariff close to the European level, which reached US$345 per thousand cubic metres in the first quarter of the year and is expected to rise to US$500 in the fourth. However, China reportedly wants to pay US$200, the same as it pays Australia and Central Asian countries.

Negotiations continue this week in Moscow, and, if successful, would see Russia supplying 68 billion cubic metres of gas to China each year over a 30-year period.

Foreign Ministry spokesman Hong Lei said in Beijing yesterday both sides 'are seeking consensus on the relevant issues through friendly consultations'.

Russia's deputy prime minister, Igor Sechin, also said negotiations were 'considerably advanced'. As an apparent conciliatory gesture, he added that the country's top crude producer, Rosneft, may increase oil shipments to China. He also said Russia will ship 12 million tonnes of coal to China this year.

Hu's visit to Russia has coincided with the 10th anniversary of the signing of the Sino-Russian Treaty of Friendship, and the two leaders made a joint declaration yesterday acknowledging it. They also expressed joint views on a range of international issues, such as opposition to outside interference in the unrest in the Arab world, Iran's right to nuclear power, and a readiness to resume nuclear talks with North Korea.

Yesterday, tourism officials in China also announced that the Chinese side of Heixiazi Island will be opened to tourists on July 20. The island, known as Bolshoi Ussurivsky in Russian, saddles the Sino-Russian border, and the two countries agreed in November to develop it jointly as a tourist destination under the concept of 'one island, two countries'.