UPDATE 2-Russia close to landmark oil and gas deals with China

Wed Feb 27, 2013 9:37am EST

Related Topics

* Russia's Deputy PM says China may give a loan to Rosneft

* Gazprom and China have been in gas talks for years

* Gazprom had planned to sell 68 bcm of gas to China per year

* Russia pushing for closer energy ties with Asia

By Vladimir Soldatkin

MOSCOW, Feb 27 (Reuters) - Russian state-owned energy companies Rosneft and Gazprom moved closer to landmark deals with China on Wednesday, urged by President Vladimir Putin to forge deeper ties with Asia's growing energy markets.

Moscow has had bumpy relations with Beijing, including a brief conflict in 1960s over a small river islet, but the world's largest energy producer and its largest consumer share increasingly similar views on global issues such as Syria.

Gazprom said it had agreed with China National Petroleum Corp to sign a deal by year-end to supply it with gas. Rosneft, a senior minister confirmed, is in talks with China for a major loan, which would be secured by an increase in oil supplies.

Putin, who closely oversees Russia's big energy deals, has told the state energy majors to look East as Europe seeks to reduce energy dependence on its former Cold War enemy.

Gazprom's gas exports to western Europe and Turkey fell by 7 percent last year to 139 billion cubic metres as the euro zone's economic crisis sapped demand.

Russia, the world's top crude producer, pumps 300,000 barrels per day of oil by pipeline to China. But Moscow has been unable to secure a deal to pipe gas to China due mainly to differences on price and on routes.

On Wednesday Gazprom, the world's largest gas company, set a new deadline for completing the talks - the end of this year.

"Gazprom and CNPC agreed to intensify the talks on Russian natural gas supply via the eastern route with the aim of signing a purchase and sale contract by the end of 2013," Gazprom said.

China is trying to secure more sources of gas, including from Turkmenistan, as its demand is expected to quadruple by 2030.

Gazprom previously said that supplies from Russia could be split, with 30 bcm per year coming from Gazprom's existing western Siberian fields and a further 38 bcm per year from its far eastern fields.

Its proposed Eastern route would include transport of gas via a pipeline along the Pacific coast and shipment of LNG on tankers at sea. Gazprom plans to launch a gas liquefaction plant near Vladivostok in 2018 with initial LNG output of 10-20 million tonnes (up to 27 bcm) a year.

Gazprom said that it discussed the Vladivostok LNG project with CNPC, without elaborating.

Its share price rose in Moscow by 1 percent, outpacing a flat broader market.

ROSNEFT LOAN TALK

Rosneft, headed by Igor Sechen, Putin's long-standing ally, already supplies China with oil via a spur from the Eastern Siberia-Pacific Ocean pipeline.

Industry sources have said that Rosneft is seeking to borrow from CNPC in return for possibly doubling oil supplies, which would make Beijing the top buyer of Russian oil and divert supplies from Europe.

Deputy Prime Minister Arkady Dvorkovich said China may lend Rosneft money to help finance a proposed increase in oil supplies, news agency Interfax reported.

"It (a loan) is not ruled out. This was discussed by Rosneft and a Chinese bank," Dvorkovich, who is responsible for Russia's energy sector, was quoted as saying by Interfax. Rosneft declined to comment.

Rosneft and Russian oil pipeline monopoly Transneft previously borrowed $25 billion from Beijing to facilitate the acquisition of the assets of nationalised oil producer Yukos and construction of the pipeline to China.

Rosneft has already raised a significant amount of debt to finance a $55 billion acquisition of TNK-BP, a 50-50 joint venture between BP and the AAR consortium of Soviet-born tycoons.

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