China, Russia bolster ties with gas, trade deals

By Darya Korsunskaya and Chris Buckley

BEIJING (Reuters) - Russia and China bolstered their close but increasingly imbalanced relationship on Tuesday when Russian Prime Minister Vladimir Putin ushered through a tentative gas supply agreement and deals worth $3.5 billion.

Putin's talks with Chinese Premier Wen Jiabao also covered the international hotspots on which the countries share many views, but with China's economy steaming ahead while Russia has lagged during the global downturn, they focused on nurturing ties in trade and energy.

The centerpiece of the day was a preliminary agreement on Russian state-run gas giant Gazprom supplying China National Petroleum Corp (CNPC).

"China is a colossal market. The diversification of supplies is a very important direction for Gazprom," Putin told reporters after his talks with Wen.

"Our cooperation is growing in many ways: mining, joint work on pipelines, oil supplies and in the future, possibly, gas."

Gazprom Chief Executive Alexei Miller told reporters the deal could open the way to Russia, the world's biggest natural gas producer, supplying 70 billion cubic meters per year to China from Siberia and the Russian Far East, including Sakhalin.

This could make China the biggest buyer of Russia's natural gas, overtaking Germany, which imported around 37 bcm last year.

Russia's senior energy official, Deputy Prime Minister Igor Sechin, said gas deliveries could begin in 2014 or 2015, and that pricing issues could be decided at the start of 2010.

But it has been more than three years since the two sides signed a preliminary gas deal, and the new pact has not resolved disagreements over pricing and conditions that have blocked concrete progress before.

"You have to ask yourself how sustainable some of these deals will be," Bobo Lo, senior research fellow at the Center for European Reform in London, said before the gas deal.

"China, and Asia in general, are still a default fall-back for Russia, not its priority for energy deals."

Russian and Chinese companies also signed deals worth $3.5 billion on Tuesday, the second day of Putin's visit to Beijing, his deputy, Alexander Zhukov, told reporters there.

They included at least $1.7 billion of loans from Chinese banks to Russian banks, among them a $500 million loan from the Agricultural Bank of China to No. 2 Russian bank VTB.

Russian oil industry leader Rosneft and CNPC would build a refinery 100 km (60 miles) from Beijing and planned to open 300 to 500 gasoline filling stations in China, Sechin said.

EAGER FOR DEALS