Russia, China Clash On Prices
Russia’s Prime Minister Viktor Zubkov will spend all Tuesday in company of China's Premier Wen Jiabao, who arrived in Moscow yesterday. In the morning, both premiers are due to open Russia’s-Chinese Economic Forum in the Column Hall of the Union House. They will have bilateral talks in the White House in midday and meet with President Vladimir Putin later on. But the key result of Wen Jiabao’s visit is clear already – the parties have failed to agree on the terms for crude oil supplies to China.
”The agreement on constructing an oil pipeline from Skovorodino to China’s border won’t be signed,” news agencies reported before Russia’s tour of Wen Jiabao with reference to an anonymous representative of Russia’s government. Last time, China was proposed to sign the agreement by Vice Premier Alexander Zhukov, who went to Beijing early October.
Judging by the yesterday’s comments of the RF government’s spokesmen, the parties proved unable to agree on the price for crude oil. Moreover, it appears that the RF cabinet has no document for sealing that is uniform in essence. “For us, it is vital to get long-term guarantees for buying before signing the document,” representative of the government announced, adding that “one should approach the agreement in complex, so that it includes an oil pipeline, buying guarantees and the price policy.”
In October, however, Zhukov spoke only about the intergovernmental agreement on the pipeline construction, specifying that the companies, not the government, should negotiate over long-term supplies of crude oil.
Nowadays, the oil is supplied to China by railway. Under the agreement of 2005, Rosneft is due to deliver 29 million tons by 2010 in settlement for the loan. The prices have soared since 2005, but both Zhukov in October and government’s representatives yesterday promised the contract terms wouldn’t be violated. But the carrier, Russian Railways (RZD), has no strict obligations, and RZD’s rates for China’s deliveries are being adjusted by the Federal Service for Tariff Rates.
The dispute over the prices for crude oil has hit the turnover of both countries – the red ink in China’s favor was first registered in May and June of 2007. In the government, they blame domination of China’s imports over Russia’s exports on unwillingness to confine to selling the crude oil exclusively. So, Wen Jiabao will be urged today to buy machinery and equipment instead of the cheap crude oil.
www.kommersant.com
All the Article in Russian as of Nov. 06, 2007
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