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Rosneft, Transneft dispute financing China pipeline upgrade
July 22, 2013, 5:36 pm

The deal is likely to make Moscow China’s biggest energy supplier [Xinhua]

Russia’s Deputy Economic Prime Minister Arkady Dvorkovich has convened a special meeting to discuss the financing issue [Xinhua]

Russian oil major Rosneft and pipeline operator Transneft are in discussions to finalise the passage of additional oil supplies to China.

The increase of oil supplies to China announced at the International Economic Forum in Saint Petersburg demands the upgrade of the East Siberian Pacific Ocean Pipeline (ESPO), as well as other export routes to China.

Transneft spokesman Igor Demin was quoted by Russian business daily Vedomosti as saying that the company will stop pumping unless Rosneft finalises documents three days before the end of the month because “the documented plan would be accomplished already.”

Rosneft was ready to pay a higher tariff for additional pumping, but rejected the bid to finance the upgrade, saying Transneft had raised the price too high.

Russia’s Deputy Economic Prime Minister Arkady Dvorkovich has convened a special meeting to discuss the issue.

Alexander Kirevnin, analyst at VTB Capital told The BRICS Post that the recent statements by Transneft underlining doubts over who would finance the project, “is most likely driven by the current negotiations related to ESPO pipeline extension.”

Russia’s state-owned oil giant Rosneft will supply $270 billion worth of crude oil to China, the company announced in June.

The deal is likely to make Moscow China’s biggest energy supplier, an attempt to reshape Russia’s oil exports geography, experts say.

The deal signed by Rosneft President and Chairman of the management board Igor Sechin and Chairman of China National Petroleum Corporation (CNPC) Zhou Jiping envisages the export of 365 million tons of oil to China over the next 25 years.

Transneft, the state pipeline operator, already started pumping additional oil to China in July, although the volume of the oil exports are yet to be officially documented.

Speaking at the Saint Petersburg International Economic Forum, Sechin said his company and Transneft have no differences.

“We are in contact and interact with Transneft’s CEO Nikolai Tokarev. There was no conflict. Obviously, during commercial work the companies may have different positions. But this is not a conflict but a regular negotiations process,” Sechin said at SPIEF.

“Sporadic lag in the document flow is a normal working process in our view. We do not expect to see any material delays in the crude oil supply graphic or on the company’s financials. However, given that the companies have not yet found a solution in the financing of the ESPO extension, more newsflow might arise,” Kirevnin told The BRICS Post.

Russian Prime news agency reports that the Rosneft delegation is negotiating details of the deal in China at the moment and quotes Rosneft representatives as saying: “The work with our partners is in full swing, and there are no hinders to additional supplies, all the supplies will be in due time.”

In an interview with the Wall Street Journal, Arkady Dvorkovich said Russia will remain “safe and stable partners” to Europe and “deliver as much gas as it needs,” but saw greater prospects for boosting sales in Asia.

By Daria Chernyshova in Moscow, Russia for The BRICS POST, with inputs from Agencies