Izvestia: "Prime Minister to negotiate oil and gas prices with China"
Although the agenda will include numerous issues such as the UN resolution on Syria or the Russian-Chinese partnership in modernisation, the talks will mainly focus on energy. China has regularly underpaid for Russian oil subtracting from the so called T-coefficient from the oil price. The price for Russian gas supplies to China from 2015 also has yet to be negotiated.
Ahead of Vladimir Putin's visit, a large Russian delegation headed by Deputy Prime Minister Igor Sechin left for Beijing.
"Sechin is in China and is conducting intensive talks," the government's deputy chief of staff, Yuri Ushakov, told Izvestia. "Russia has strict parameters for gas and oil prices; an expert group is discussing all the issues surrounding energy cooperation with Beijing."
Before Vladimir Putin meets with Wen Jiabao, Sechin will report the results of his negotiations to Putin, and many points will be clarified, Ushakov said.
However Russia's experts aren't expecting a big change in China's position. An Izvestia source at Gazprom says this visit will not change much regarding the gas price issue.
"Both Russian and Chinese working groups are travelling back and forth, and there is a lot of laborious work. It is hard to estimate when an agreement is possible," the source said.
On the other hand, the gas road map signed by Russian President Dmitry Medvedev in the autumn of 2010, offers both sides sufficient time to reach an agreement by the end of 2011.
According to analysts, Russia's gas sales to China could reach 75%-80% of the total sold to Europe. Moscow is proposing a price based on the average European gas price of $350 for 1,000 cubic metres. However, China is insisting on a price closer to $250.
"China wants to apply oil discounts to gas," said an Izvestia source that is close to the talks.
The current dispute over oil began in February 2011. At that point the Russian distributor billed its Chinese partners $370 million for the oil acceptance certificate, yet the Chinese distributor transferred $25.6 million less than that. Beijing's figure was calculated after subtracting expenses for oil transport from Skovorodino to the port of Kozmino and marking it under the T-coefficient. As a result, the Chinese subtracted $13 from the stipulated price for one barrel of oil. After long talks, they reduced their claim to $9 per barrel.
"Currently they are underpaying $3 per barrel. On the basis of this figure, they have repaid their debt from early 2011. It is not clear how much more they will agree to concede. They have mentioned $1 in informal talks," the source said.
Transneft says that if they fail to reach an agreement in this round of talks they will appeal to the London Court of International Arbitration (LCIA).
"We hope that common sense will prevail; but this year's talks leave little hope," Transneft spokesman Igor Dyomin told Izvestia.
Anastasia Novikova, Yelena Shishkunova, Pavel Arabov
