China's Hu seeks gas breakthrough in Russia

16th June 2011, Comments 0 comments

Chinese President Hu Jintao met Russian leaders on Thursday in search of a breakthrough in stalled negotiations on a mega-contract for Russia to pump gas to China for the next three decades.

President Dmitry Medvedev and Hu signed a number of agreements after Kremlin talks but the deal between Russian gas giant Gazprom and China National Petroleum Company (CNPC) did not materialise as negotiations were continuing.

Vladimir Putin, Russia's powerful prime minister considered the country's paramount leader, will host Hu at Gazprom's headquarters in southern Moscow where the two will discuss gas supplies, his spokesman Dmitry Peskov said.

"We have significantly moved forward" in the gas talks over the past several days," Russia's energy supremo, Deputy Prime Minister Igor Sechin, told reporters. "In principle there is an understanding here."

Sechin toled AFP that both sides needed to be patient, given the magnitude of the deal.

"We are very serious about this cooperation. Let us work with them a bit," he said.

Russia and China had hoped to finish the talks with an eye to finalising a firm contract so it could be triumphantly signed during Hu's visit, which will also see him attend a major investor forum in Saint Petersburg this week.

Gazprom and CNPC signed a framework agreement in 2009 which could eventually see almost 70 billion cubic metres of Russian gas sent to China annually for the next 30 years but talks became mired in differences over pricing.

Russian and Chinese officials said in late May that the two sides still had to find common ground on prices.

Russia has in recent years sought to align itself more closely with China as it seeks to unlock new energy markets in Asia.

It said last year it hoped to clinch the gas deal with China by mid-2011, with first deliveries through Siberian pipelines to start in 2015.

Some analysts believe that Russian and Chinese officials will not sign a firm contract during Hu's stay in the country, instead opting for a face-saving general agreement.

"I am afraid that all they'll sign will be a non-binding political agreement," said Artyom Konchin, an analyst at Unicredit Securities.

Beijing has a stronger negotiating position as it has many potential suppliers and can afford to wring out the lowest possible price during talks with Moscow, he added.

Relations between Moscow and Beijing have a turbulent history.

Once bitter foes during the Cold War, Moscow and Beijing have over the past years ramped up cooperation as both are driven by a desire to counterbalance US global dominance.

Moscow speaks of Beijing as its strategic partner even though it has watched its neighbor's rapid economic growth with a combination of jealousy and unease.

The Kremlin said economic ties had successfully weathered the global crisis. Trade turnover grew by 34.5 percent to more than $59 billion last year, with China for the first time becoming Russia's top economic partner.

The two presidents issued an unusually detailed joint statement on the global situation, warning against outside interference in the crises shaking the Arab world.

"Outside forces should not interfere in internal processes in the countries of the region," the said, in a clear hint that Moscow and Beijing would not support a UN resolution on Syria.

Mindful of accusations of human rights violations at home, Russia and China traditionally caution the West against interfering in what they say are domestic affairs of sovereign nations.

© 2011 AFP

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