Russia could lose $3 bln on China oil supplies - sources
MOSCOW. Feb 28 (Interfax) - Russia stands to lose $3 billion in revenue from oil supplies to China in just under 20 years.
Rosneft and Transneft are amending long-term supply deals with China, reached last year and envisaging discounts on crude oil, via their boards of directors.
Sources with knowledge of the situation told Interfax that Rosneft's board would discuss amendments to its agreement on February 28.
The company itself said on Friday that the agenda for today's meeting would include transactions worth upwards of $500 million, which would later be submitted for approval by shareholders at an extraordinary meeting.
One source told Interfax that the Transneft board had already approved amendments to the long-term oil supply agreement with China.
Transneft had said its board planned to decide on changing the terms of a major deal between the company and Rosneft at a meeting on February 22.
Interfax's sources said that in October last year, Russia agreed to sell oil to China at a discount of $1.5 per barrel. Shipping 15 million tonnes of oil to China per year for just under 20 years could cost Russia $3 billion in lost revenue.
The companies themselves are not commenting on the information.
A 2009 intergovernmental agreement between Russia and China provides for state companies Rosneft and Russian oil pipeline company Transneft delivering 15 million tonnes of oil to China per year for 20 years from January 2011 this year via an ESPO spur to Skovorodino. China extended Rosneft and Transneft credits of $15 billion and $10 billion in return for guaranteed oil shipments.
CNPC has been trying to force down prices for the Russian oil it buys from Rosneft and Transneft. CNPC thought it was paying 2%-3% over the odds for oil sent through the ESPO spur. China had asked for a review of the pricing formula and that it be calculated not as sent from the port at Kozmino, the endpoint of the ESPO pipeline, but from the inception of the spur to China. This means China is requesting that Russia not consider the haul distance in shipping oil to China and has asked for a change to the tariff (the "T" coefficient) for pumping oil from the spur to Kozmino. China has also stopped paying Russia the amount it sought to have the tariff reduced by. Debts of $250 million arose as a result, and Rosneft and Transneft began consulting on the possibility of suing CNPC in the courts in London.
At the end of May, after the Energy Dialog in Moscow, China paid off about three quarters of what it owed for Russian oil, but continued to under-pay by $3 per barrel.
Deputy Prime Minister Igor Sechin said during Prime Minister Vladimir Putin's visit to China at the beginning of October last year that Russia and China had settled the oil question. He said a major decision had been reached that should be reflected at corporate level, but he did not specify the nature of the agreements.
