MOSCOW - In a move to secure a steady
hydrocarbon inflow from the north, visiting Chinese
Premier Wen Jiabao has pledged to invest US$12 billion in
Russia's infrastructure and energy sector by 2020. But
despite the economic incentive, Beijing seemingly failed
to win a clear commitment from Moscow to build a $2.5
billion oil pipeline from Siberia.
In a joint
statement by Wen and his Russian counterpart Mikhail
Fradkov, the two also pledged to boost trade. In the
first eight months of this year, bilateral trade reached
$12.9 billion, up 35% year-on-year. In 2004, this is
expected to hit $20 billion. The two nations have
pledged to winch it to $60 billion by 2010.
During his first official visit last week to Russia since assuming
the premiership, Wen made a six-point proposal on
boosting bilateral ties: improve trade structure; boost
mutual investment; develop energy cooperation; reinforce
ties in high technology; encourage
border trade; and promote humanitarian ties. But
despite all the other subheads, Wen's blueprint appears
to be in essence energy-driven, aiming at
securing steady oil supplies from Russia.
On his Moscow
trip from Thursday to Saturday, Wen also met Russian
President Vladimir Putin, Federal Council Chairman
Sergei Mironov and Russian State Duma Chairman Boris
Cryzlov. Through all official meetings and the
subsequent announcements, Beijing's preoccupation with
energy supplies was evident.
Beijing has been
pushing the Russian government to intervene to get the
country's top oil exporter, Yukos, to continue its
shipments to China. The Chinese government has been hit
hard by the year-long legal assault on Yukos, which has
a long-term supply contract with two of its largest
refiners - China National Petroleum Corp (CNPC)
and Sinopec - that accounted for some 8% of all Chinese
crude imports in the first half of the year.
Yukos has threatened to stop crude deliveries
from this Tuesday, saying it cannot afford the shipping
cost. It had a contract to deliver the oil by the end of
this year to CNPC. Yukos officials, however, say the
company will fulfill another contract to send more than
750,000 tons to Sinopec. China has received 3.7 million
of the 6.5 million tons of oil it expects from Russia by
rail this year, nearly all of it from Yukos.
Yukos' move to cancel the shipments is
seen by some as an attempt to pressure the Russian
government to relent in a dispute over the company's
back taxes. Russian authorities have frozen Yukos' bank
accounts and thrown its head, Mikhail Khodorkovsky, into
jail to get the company to cough up a staggering $7
billion in taxes. Thus Yukos is understood to have timed
its announcement to coincide with Wen's visit. CNPC
officials complained that the oil major was trying to
pressure China to come to its rescue in its battle with
the Russian government.
A top-ranking Yukos
official, however, maintained the reason behind the
suspension was purely financial, not political. It just
couldn't bear the shipment cost anymore since it was in
no position to pay Russian Railways (RZD) to deliver
the oil. But RZD president Gennady Fadeyev said CNPC had
offered to pay up front for the transport cost in
October and deduct this from its subsequent payments to
Yukos. The beleaguered oil company currently pays about
$160 in transport tariffs and export duties for each of
the 650,000 tons it ships to China each month, including
400,000 to CNPC and 250,000 to Sinopec.
Moreover, last week RZD said it would
spend more than $1 billion in upgrading and expanding its
sole link to China to double cargo shipments within six
years. "The current volume of cargo shipped between
Russia and China is 30 million tons a year. By 2010, we
plan to double that number," Fadeyev said. According to
him, RZD would spend 14 billion rubles ($480 million)
modernizing a 365-kilometer stretch of track that runs
from Karymskaya Station near the Siberian city of Chita
to Zabaikalsk on the Chinese border by 2008. Another 16
billion rubles would be spent laying a second, parallel,
track.
None of this tall talk, however, was
enough to dispel China's concern. Moscow even reiterated
that it would deliver crude by rail to China - 10
million tons in 2005 and 15 million tons in 2006. But
Russians officials failed to clarify just how this would
be achieved or which company would replace Yukos as the
country's leading oil exporter.
In yet another economic
incentive, Wen promised his government's backing
for Russia's bid to join the World Trade Organization.
Wen said on Friday that his country and Russia had
reached an agreement on Moscow's bid to join the WTO,
and the final document of endorsement would be signed
next month when President Putin visits China.
Russia needs the support of WTO members to join
the trade bloc. Wen told reporters after meeting Premier
Fradkov that agreeing to the terms of Russia's WTO
membership was "the most important result of our
meeting".
Russian news agencies quoted Wen as
saying Moscow had confirmed its pledge to build the oil
pipeline to China as an additional stretch to its
Pacific pipeline. But no time frame or other details
were provided. Wen said he discussed ways to secure a
steady supply of oil from Russia. "The two countries
will take measures to implement the cooperative projects
in oil and natural gas, including the construction of
pipelines between China and Russia," the joint statement
said without elaborating.
The two countries have
been discussing the prospect of a pipeline from Russia
to China for more than a decade. Beijing has been
lobbying Moscow to build the $2.5 billion pipeline to
ship Siberian oil to Daqing in northern, China. The
Yukos-led plan to build the Angarsk-Daqing pipeline to
China has been stalled since the Kremlin has backed the
Japan-oriented Taishet-Nakhodka pipeline to the Pacific
coast. Even after Wen's talks in Moscow , it's still
unclear if Russia indeed plans to build the pipeline
from Siberia and whether it would include a branch to
China.
But despite Russia's ambiguity, Wen's
visit indicates Moscow is generally satisfied with its
emerging role of a hydrocarbon supplier to energy-hungry
China. Wen discussed possible Chinese plans to invest up
to $12 billion in Russian energy sector, but there was
not a word on Russian investments in China, implying
that Chinese investments are to be swapped for Russian
energy supplies.
But Russia's pipeline dodge
could eventually undermine the energy partnership.
China's $12 billion investment pledge could well prove
conditional, its materialization hinging on the progress
of the Daqing pipeline project.
Sergei
Blagov covers Russia and post-Soviet states, with
special attention to Asia-related issues. He has
contributed to Asia Times Online since1996. Between 1983
and 1997, he was based in Southeast Asia. In 2001 and
2002, Nova Science Publishers, New York, published two
of his books on Vietnamese history.
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