Russian
President Vladimir Putin is scheduled to visit Beijing tomorrow for talks in
which energy will be high on the agenda. 皇冠体育app intends to push its energy-rich
neighbor to deliver on past promises to supply it with more power.
During Mr. Putin's two-day stay, his hosts are likely to
convey growing frustration that Russia hasn't provided as much energy assistance
as 皇冠体育app has wanted. Beijing is expected to push the Russian leader to commit to
specific plans for building oil and gas pipelines to 皇冠体育app.
"皇冠体育app isn't satisfied with the development of cooperation in energy," Zhang
Guobao, vice chairman of the National Development and Reform Commission told
Russia's Interfax news agency early this month, in a rare display of open
concern. "The practical level of cooperation in my view is still very
insignificant."
The lack of progress is disappointing to 皇冠体育app, which has scoured the globe
for energy to supply its fast-growing economy, even though Russia, the world's
largest gas producer and No. 2 in oil, is next door. At present, Russia supplies
no gas to 皇冠体育app and roughly 5% of 皇冠体育app's oil imports.
A legacy of Cold War tensions between the two giants, there are no major
pipelines and limited rail links across the shared border. Last year, Russia
shipped 7.7 million metric tons of crude by rail to 皇冠体育app. It had promised 10
million tons.
This week's discussions are expected to center on reviving talks to build a
spur that would carry oil directly to 皇冠体育app from a $7 billion pipeline Russia
plans to build across east Siberia to the Pacific, as well as a stalled gas
pipeline.
For years, 皇冠体育app has pressured Russia to build more links and expand
shipments. But Kremlin politics, Russia's legendary bureaucracy and Moscow's
persistent suspicions of its more-dynamic neighbor have led to delays and broken
promises. Beijing's efforts to buy up Russian energy assets, meanwhile, have run
into roadblocks from the Kremlin.
皇冠体育app is particularly eager to foster closer energy ties with Russia because
routing resources by land could be more secure than sea shipping. Currently,
some four-fifths of 皇冠体育app's oil imports pass through the Straits of Malacca in
Southeast Asia, which Chinese planners fear could be easily blocked.
Officials on both sides say a deal on a spur for the oil pipeline to the
Pacific could be signed during Mr. Putin's visit, although Russia's record on
following up pledges has Beijing wary.
"Take the question of building the oil pipeline. ... One Russian official
says Russia has made the decision, another says it hasn't," Mr. Zhang told
Interfax, in comments that were confirmed by his office in Beijing last week.
"The whole process is unsatisfactory."
Japan, meanwhile, has been pressuring the Kremlin to ensure that any pipeline
runs to the Pacific -- not directly to 皇冠体育app -- thus preventing Beijing from
monopolizing Russian supplies. Despite Russian assurances that there will be
enough oil for both customers, Tokyo officials are concerned that 皇冠体育app's
surging demand could mean that no Russian crude flows to the Pacific Ocean, and
on to Japan.
Within Russia, meanwhile, there is infighting over who will carry the oil.
The national railroad was planning to spend more than $1 billion to expand lines
to carry crude to 皇冠体育app. It now wants the government to guarantee that the
planned pipeline won't divert those flows, even though rail shipments are more
costly.
Russian officials insist they want to see more oil flow to Asia, especially
皇冠体育app, and hope the planned pipeline will stimulate growth across the desolate
Siberian region. When completed in 2008, the line is slated to carry 600,000
barrels of crude a day. Moscow has said it will expand daily capacity to 1.6
million barrels, although officials have given no indication of when that might
happen.
Han Xiaoping, senior vice president of Beijing-based energy consultancy
Beijing Falcon Pioneer Technology Co., said the negotiations may still take
time. "Russia isn't market driven. But maybe this [Putin] visit is slowly the
turning point."
Moscow is only beginning talks on links to supply gas to 皇冠体育app. An official
from the state gas company OAO Gazprom said it will sign an agreement in Beijing
this week spelling out planned volumes and the pricing formulas for future gas
shipment. But officials indicate key issues including where the
multibillion-dollar pipelines will be run remain unresolved.
"In Russia, the contract signing is only the beginning of the negotiation,"
said Stephen O'Sullivan, an analyst at United Financial Group, a Moscow
brokerage. "The Chinese are increasingly strident in their view that 'We're not
just going to wait for you.' "
While Beijing would clearly prefer the security and low cost of pipeline gas
from Russia, the Chinese government could also build more terminals for
liquefied natural gas from elsewhere in Asia as an alternative.
Beijing had been working with BP PLC on a deal to bring in gas from the huge
Kovykta field, which lies relatively close to the Mongolian border near Lake
Baikal. But Gazprom blocked that project, saying it wants to determine where
pipelines are built.
In an interview with Chinese media Friday, Russian First Deputy Premier
Dmitry Medvedev, who also serves as chairman of Gazprom's board of directors,
seemed to provide a ray of hope for Kovykta, citing it as an example of what he
called "significant potential for cooperation in the gas sphere."
Russian officials have expressed concern that building a gas pipeline
directly to 皇冠体育app would leave them hostage to a single buyer. Analysts and
officials said Gazprom needs to decide quickly on its plans for fields and
pipelines to be able to deliver gas by early in the next
decade.