Kremlin's point man for China trade Gennady Timchenko sees more big deals | South China Morning Post
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Kremlin's point man for China trade Gennady Timchenko sees more big deals

Russian tycoon Gennady Timchenko, Moscow's 'point man' for business with Beijing, says he expects more contracts to follow major gas deal

PUBLISHED : Thursday, 22 May, 2014, 11:40pm
UPDATED : Friday, 23 May, 2014, 6:53pm

Tycoon Gennady Timchenko, who has had sanctions imposed on him by the United States, said yesterday he expects a flurry of deals between Russia and China following his appointment as Moscow's "point man" for business relations with China.

The sanctions are part of a broader drive by the West to put pressure on President Vladimir Putin and business and political leaders loyal to him over Russia's annexation of Crimea from Ukraine.

[The gas deal] is probably the most important economic event of the last decade
GENNADY TIMCHENKO

"You know what Putin said? He introduced me [to Chinese businessmen] by saying now Mr Timchenko is the head of our [China-Russia] business council. In other words - it is my words here - he is our main man for China," said the billionaire, who accompanied Putin on this week's trip to China.

His appointment, as head of the Russian side of an officially approved Sino-Russian business body, was reported by the official Itar Tass news agency on April 29.

In his first meeting with reporters since sanctions were imposed in March, Timchenko - who until a few years ago had not given a single interview - was brimming with confidence, smiling and joking.

Russian gas giant Gazprom this week clinched a long- delayed US$400 billion natural gas deal with China in a major pivot of Russia energy flows to Asia.

"I think the Gazprom contract is probably the most important economic event of the last decade," he said. "This deal will allow us to balance between Europe and Asia and thus increase the competitiveness of our gas."

Timchenko said he anticipated new deals with China soon, including the companies he co-owns such as gas producer Novatek . He also expected Russia to increase purchases of hi-tech equipment from China as US firms scale back supplies due to sanctions.

He said China is prepared to finance most of Russia's largest liquefied natural gas project, Yamal in the Arctic.

Chinese banks are "likely able" to provide as much as US$20 billion of the estimated $US 27 billion cost of the development, Timchenko told reporters at the St Petersburg International Economic Forum. The first loans will start in the fourth quarter, he said.

Timchenko said the Western sanctions won't affect Yamal LNG, in which Paris-based Total and China National Petroleum Corporation each own 20 per cent.

The deal signed this week is seen as a high-stakes balancing act by China, aimed at building influence and access to resources abroad without damaging ties with the US, its most important economic partner. Chinese leaders have been trying to build up groups of Asian and developing governments to offset the influence of the US and other Western nations in global affairs.

Beijing and Moscow, once rivals for leadership of the communist movement, have built a strategic partnership since the end of the Soviet Union in the early 1990s, driven by their shared unease at US dominance.

Wednesday's gas deal highlights the mix of interests and potential conflicts between Beijing and Moscow. An agreement was important to both sides but they haggled for more than a decade over the price, a hard-headed commercial issue.

The gas deal helps Russia out of its isolation by Western governments unhappy with its role in the Ukraine crisis. Gazprom will be able to reduce its reliance on European customers while meeting some of China's pressing energy needs.

Washington warned China it didn't want any other nations doing business deals with Moscow to detract from sanctions imposed over Ukraine but said it understood the Chinese economy's need for energy.

"Chinese officials clearly understood the distinction between deals in which there have been ongoing negotiations for some time and new deals that opportunistically fill the space left by US and EU sanctions," the US Treasury said.

China's US$89 billion in trade with Russia last year was barely one-sixth its US$521 billion in total imports and exports with the US, also an important source of investment and technology.

Reuters, Bloomberg, Associated Press

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