June 20, 2013 / 1:41 PM / 7 years ago

Putin says Rosneft close to $60 billion China oil deal

ST PETERSBURG, Russia (Reuters) - Rosneft (ROSN.MM) plans to sign a deal to supply China with oil worth $60 billion, Russian President Vladimir Putin said on Thursday, in what could be a further shift in Russian oil flows away from Europe.

The logo of Russia's top crude producer Rosneft is seen at the company's headquarters, behind the Kremlin wall, in central Moscow May 27, 2013. REUTERS/Sergei Karpukhin

Russia has been ramping up oil deliveries to China, and Asia now accounts for almost a fifth of its oil exports.

“A large-scale contract, without any exaggeration, has been prepared by Rosneft. Supplies to China are expected in volumes of hundreds millions of tonnes of oil. And this in total worth over $60 billion,” Putin said during a meeting with Chinese Vice Premier Zhang Gaoli at an economic forum in St Petersburg.

Putin, the ultimate decision-maker on Russian energy deals, also told Zhang he had high hopes for cooperation between China and Russian gas companies Gazprom (GAZP.MM) and Novatek (NVTK.MM).

Ties between Russia and China have become increasingly close. They often share a common position on international issues such as North Korea’s nuclear program and civil war in Syria.

In March, new Chinese leader Xi Jinping made Moscow the destination for his first overseas trip.


Rosneft agreed to boost oil supplies to China in March, and a source at the state-owned company said Thursday’s deal was connected to that agreement.

Igor Sechin, the head of Rosneft and a close ally of Putin, has said oil supplies to China could be tripled, without providing a timeframe or specifying the source of that increasing in oil shipments.

Sechin told the Rosneft annual meeting on Thursday that the East Siberian fields that feed Russia’s pipeline to China would be the main source of output growth over the coming five years.

But the two main fields named by Sechin, Vankor and Verkhnechonsk, are nearing peak output, and launches of major new fields are a few years away.

New pipeline capacity also must be built to accommodate a large-scale boost in exports.

Most of Russia’s 50,000 km oil pipeline network is concentrated in West Siberia and runs towards Europe. Russia launched the first stage of the ESPO link to Skovorodino at the Chinese border in 2009.

In January 2011 Russia started pipeline deliveries of 300,000 barrels per day to China.

Putin has advised Russian companies to forge close energy deals with Asia as crisis-stricken Europe has been trying to cut dependence on imports of oil and gas dependence from Russia, the world’s largest oil producer.

Sechin has also agreed a deal with China National Petroleum Corporation (CNPC) on joint development of three offshore blocks in the Barents Sea and eight onshore deposits in East Siberia.

“I think that Sechin spends more time in China than in Russia,” Putin jokingly told China’s Zhang.

Reporting by Alexei Anishchuk; writing by Vladimir Soldatkin; editing by Elaine Hardcastle and Jane Baird

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