UPDATE 1-Russia probes landmark Chinese oil deal - paper

Thu Apr 12, 2012 8:14am EDT

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(Adds lawmaker comment, background on government reshuffle)

MOSCOW, April 12 (Reuters) - Russia's General Prosecutor has launched an investigation into a 2009 oil-for-loans deal with China in which state-controlled energy giants Rosneft and Transneft borrowed $25 billion, the Vedomosti daily reported on Thursday.

The 30-year export deal, to pump crude through a new eastern pipeline, has been the subject of a pricing dispute that was resolved in March, when Rosneft granted China National Petroleum Corp (CNPC) a discount of $1.50 per barrel.

Prosecutors began the probe in late March at the request of Communist lawmaker Nikolai Kolomeitsev, the paper said.

Kolomeitsev told Reuters the discount threatens around $3 billion dollars of profits, adding "three billion is a serious amount of money."

Interfax news agency quoted an unnamed source at the prosecutor's office as confirming an investigation was under way and adding that no legal violations have come to light so far.

The prosecutor's office had no immediate comment.

The scale and nature of the probe was not clear, but Russian prosecutors are obliged by law to open investigations in response to a public filing. Most cases are closed quickly.

The investigation is being seen by some Kremlin watchers as the latest chapter in a power play ahead of a government reshuffle, which will follow the inauguration of President-elect Vladimir Putin on May 7.

The fate of Russia's powerful Deputy Prime Minister Igor Sechin, who controls Russia's oil and gas sector, is hanging in the balance, they said.

Outgoing President Dmitry Medvedev, named by Putin as Russia's next premier, has a history of conflict with Sechin and is unlikely to want him to stay on in his current role, according to administration sources and news reports.

Sechin was forced to stand down as chairman of Rosneft in 2011, after Medvedev ordered top officials to leave the boards of state companies.

"As Sechin oversees the energy complex, this investigation can be seen as a form of pressure on him," analysts at Bank of America-Merrill Lynch wrote in a note.

"It may be the latest in the rumoured under-the-carpet tussle between Medvedev loyalists and Sechin loyalists for influence over the energy complex when the new (government) is formed."

Kolomeitsev said his decision to bring the case was unrelated to transition politics.

"The reshuffle is unfortunately nothing to do with me. I am interested purely in the interests of Russia," he told Reuters.

China is the single biggest consumer of oil from Russia's new fields in Eastern Siberia, buying 300,000 barrels per day.

Under the long-term supply deal, China lent $15 billion to Rosneft, Russia's largest oil company, and $10 billion to Transneft, which operates the country's oil pipeline network.

Rosneft declined to comment on the investigation, although a company source pointed out that the Chinese had originally asked for a bigger discount of $2.5 per barrel. Transneft declined comment. (Reporting by Jennifer Rankin and Vladimir Soldatkin, Editing by Douglas Busvine and Mark Potter)

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