Rosneft will increase oil supplies to China.
Rosneft will increase supplies to China.
Russia and China have reached an agreement on the oil supply rise. Rosneft’s exports to China will rise by 15 mln tons and might increase by another 16 mln tons. In exchange Rosneft will be issued a $2 bln loan and be made an advance payment.
Rosneft will increase the oil supplies to China. The agreements upon that were reached during the visit of the new President of China, S. Tszinpin, to Russia. Rosneft will increase the exports to China in the framework of the intergovernmental agreement. Rosneft has signed with CNPC the basic conditions of oil supply over 25 years with an advance payment. It will also be issued a $2 bln loan on profitable conditions from the China Development Bank, I. Sechin said.
The agreement on the oil supply rise, which presupposes the rise by 0.8 mln tons in 2013, is signed as an addition to the existing contract. The new agreement presupposes the growth in supplies in conformity with the infrastructure opportunities at the peak up to 31 mln tons in 3 directions, I. Sechin said. He added the final binding contracts will be signed some time in the near future. Moreover, CNPC will be a new foreign partner for Rosneft at the shelf: the company will study 3 shelf sites in the Barents and Pechora Seas (the West-Prinovozemelsky, Yuzhno-Russky and Medynsko-Verandei). The companies will also jointly develop 8 sites on the surface of Russia.
China has raised many times the issue of the possibility of the increase in oil supplies e from Russia, including to start the operation of a new oil refinery plant in Tianjin with the capacity of 10 mln tons which is planned to be constructed by CNPC and Rosneft. However, it became clear of such plans of Rosneft for the first time in early Jan. then Interfax referring to its sources reported that it was about the additional 10 mln tons a year, the use of the Kazakh pipeline to China “Atasu-Alashankou” was considered as one of the possible routes. Now Rosneft together with Transneft supplies to China 15 mln tons of oil a year. The agreement was signed in 2009, according to it until 2030, 300 mln tons of the Russian oil are to be shipped. However, the parties couldn’t reach an agreement upon the price formula, and as a result in 2011 CNPC started to under-pay for the Russian oil. By the end of the year the parties managed to agree new conditions: China was granted a discount from Rosneft and Transneft - $1.5/barrel.
Before the signing of the agreements I. Sechin said that it is real in perspective to increase the supplies to China up to 50 mln tons. On such conditions it was planned to increase the exports of the Russian oil via Kozmino by 9 mln tons, via Skovorodino – by 15 mln tons and via Kazakhstan – by 10 mln tons, a source familiar with the negotiations told Kommersant. However, the interlocutor of Kommersant explained that the changes in such volumes in each direction might lead to a number of problems. To transport oil via Kozmino Rosneft was to cut a part of the volumes traded in the free market, which would have led to the premium fall for the East-Siberian sort of oil. According to the source, by considering the supply rise in the Skovorodino-Mohe direction, the company based not on the existing reserves but on the planned resources at those deposits in the Eastern Siberia at which the works hasn’t started. The transportation via Kazakhstan was to be held in the framework of the swap-operations: from the beginning of 2014 7 mln tons of the Russian oil will be shipped to the country, in response Kazakhstan will export the similar volume to China.
The interlocutors of Kommersant say at the present moment it is possible to speak only about the supply rise via the offset from the ESPO pipeline (Skovorodino-Mohe) by 15 mln tons. There are those who don’t agree with the exports increase via Kazakhstan at the Government and the administration of the President, so this issue will be discussed, one of the interlocutors of Kommersant said. Moreover, according to them Rosneft has the necessary resource base to increase the supply on the account of new projects in the Eastern Siberia and the assets of the purchased TNK-BP.
In this situation the oil supplies rise to China is the best variant for Rosneft, the analyst of Raiffeisenbank, A. Polischuk thinks. The company that has to settle the loans for the purchase of TNK-BP, will be made an advance payment, it should be at least $10 bln, the analyst says. Though the parties faced problems with the execution of the obligations by the first contract, now it will hardly happen, Mr. Polischuk thinks. The parties are likely to manage to increase the supplies up to 50 mln tons within 5-7 years, the analyst added.
http://www.kommersant.ru/doc/2153997
Translated by Galiya Musabekova
