Sino-Russian energy cooperation is getting better: natural gas negotiations are nearing the end

On October 12, it was reported that China's sovereign investment ** - China Investment Co., Ltd. ("CIC") intends to participate in the privatization process that Russia's state-owned oil company OAO Rosneft plans to launch next year, "China and Russia Preliminary communication has been conducted but it is expected that CIC will not obtain a large proportion of shares in Rosneft."

As of press time, the news has not yet been officially confirmed. However, in the opinion of analysts, this move can only be considered as the “ice tip” of Sino-Russian cooperation in the energy sector because during the visit of Russian Prime Minister Vladimir Putin to China this year, the energy cooperation between the two sides has taken a big step – 10 On the 12th of the month, according to the China Voices "News Story" report, Premier Wen Hao of the State Council stated that "the two sides reached an agreement on the trade price of pipeline crude oil and decided to actively promote cooperation in the oil and gas fields."

For Sino-Russian natural gas negotiations that have been in the "flip" stage, Putin also gave a positive signal: "The talks on the natural gas issue are not far from the end." Putin also said that China and Russia are preparing to build a large-scale cooperative refinery in Tianjin. Based on the cooperation experience of the Tianwan Nuclear Power Station, the cooperation in the field of nuclear energy is strengthened and the world’s most advanced technology is adopted.

“China has a market and needs, Russia has resources and lacks, and the two sides can only get what they need through energy cooperation and deepen the relationship between the two countries.” Lin Boqiang, director of the China Energy Economic Research Center at Xiamen University, told reporters He said that he hopes that both China and Russia will continue to cooperate in the energy field.

Pipeline crude oil: reaching an agreement "Implementing important projects for long-term cooperation in the energy sector is the core issue of Putin's visit." Before Putin's visit to China, Russian media conducted an early and accurate pre-judgment of this meeting between Chinese and Russian leaders. The reporter found that prior to the formal talks between Wen Yu and Putin, Chinese Vice Premier Wang Qishan and Russian Deputy Prime Minister Sechin (who was also Chairman of the Russian State Oil Company) conducted the first Sino-Russian energy negotiation representative meeting.

Wen Hao revealed at a subsequent press conference that the two sides reached an agreement on the trade price of pipeline crude oil. It is understood that although the Sino-Russian crude oil pipeline began to operate on November 1, 2010, it was labeled as "commissioning," and this negotiation officially formalized the Sino-Russian crude oil pipeline. According to official sources, the Sino-Russian crude oil pipeline originates from the Russian-Swedish pipeline at the Scovorodino distribution station, and is served by 13 cities, counties and districts in China's Heilongjiang Province and the Inner Mongolia Autonomous Region. The last station is Daqing City in China.

“It is expected that pipeline crude oil prices will be agreed upon. China can use crude oil from Russia more confidently.” Lin Boqiang analyzed that “it can even further protect China’s energy supply and even energy security, especially Africa’s energy supply.”

On the day of the Wenzhou and Putin talks, China Petroleum & Chemical Corporation (hereinafter referred to as “Sinopec”) also issued a press release stating that it had reached a preliminary agreement with Russia’s Sibur to establish two joint ventures. The addresses of the joint venture companies are allegedly located in Krasnoyarsk, Russia, and Shanghai, China, with a capacity of 56,000 tons and 50,000 tons of nitrile rubber, respectively.

Negotiations on natural gas: The Sino-Russian gas talks that have been entwined for a long time near the end of the year have also ushered in good news. "We are solving practical problems. This is a good thing," Putin said. "The seller wants a higher price, and the buyer wants a lower price. We need to reach a compromise that will satisfy both parties."

According to reports, as early as 1999, Gazprom reached an agreement with China for an intentional natural gas export, but until March 2006, China and Russia signed the Memorandum of Understanding on Supply of Natural Gas from Russia to China, 2009. On October 13, the two countries further signed the framework agreement.

“Although Putin gave a positive signal, it is difficult to bridge prices in a short period of time.” Lin Boqiang said, “The difference between $250/cubic kilometre and $350/cubic kilometre (Russian exports to Europe) is a difference of $100. Even if Russia can sign an agreement with China at a price of US$250 per cubic metre, China will lose as much as one yuan per cubic metre.” However, Lin Boqiang expressed optimism about the end result. “The two sides are likely to be at the end of negotiations. One minute to reach an agreement."

However, the "Wall Street Journal" noticed that "Alexander Medvedev, vice president of Russia's Gazprom's visit to China's Gazprom (Russian representative of Sino-Russian talks on natural gas, China's China National Petroleum Corporation), said on October 11 that he Will not participate in the formal negotiations on the issue of natural gas prices." "The Wall Street Journal" believes that this may be one of the signals that the natural gas price negotiation between the two sides is still difficult to achieve a breakthrough in the short term.