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Russia's oil giant CEO opposes higher oil pumping prices for China — media

November 05, 2014, 12:06 UTC+3 MOSCOW
Rosneft CEO says this tariff increase is groundless, and the increase will hurt the company’s revenue and the tax payments
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Igor Sechin, CEO of Rosneft

Igor Sechin, CEO of Rosneft

© ITAR-TASS/Mikhail Klimentyev

MOSCOW, November 5. /TASS/. Igor Sechin, CEO of Russian state-owned oil giant Rosneft, stands against increasing tariffs for pumping oil to China, business daily Vedomosti reported Wednesday quoting his letter.

According to a government’s ruling, the tariffs will be increased 90% of expected 2014 inflation of 7.5%, or 6.75%, in 2015-2017, but in September oil pipeline monopoly Transneft asked the Federal Tariff Service to raise the tariffs for pumping oil through the East Siberia-Pacific Ocean (ESPO) pipeline by 7.5% from January 1, 2015, and the service supported the idea, Vedomosti reported.

Sechin says this tariff increase is groundless, and the increase will hurt the company’s revenue and the tax payments. Under a Rosneft contract with CNPC, the price that the Chinese company pays for Russian oil does not depend on oil pumping prices, the business daily said.

Cooperation between Rosneft and China's oil and gas major CNPC

Russian oil giant Rosneft and China National Petroleum Corporation (CNPC) this month agreed to further develop their strategic partnership.

Current cooperation between Russia's Rosneft and China's CNPC includes Rosneft’s crude oil supplies to China under a long-term contract.

In 2009, Rosneft and Russia’s oil pipeline operator Transneft signed a contract with China’s CNPC on the delivery of 15 million tons of oil annually during 15 years. In turn, China disbursed a $15 billion loan to Rosneft and a $10 billion loan to Transneft.

First crude oil deliveries under the contract started in 2011. In June 2013, Rosneft signed another contract with CNPC on the delivery of 363 million tons of oil during 25 years (14.4 million tons annually).

Along with that, the joint venture Vostok-Energy established by Rosneft and CNPC is exploring and extracting hydrocarbons in the Irkutsk Region in East Siberia while the joint venture Vostok-Petrochemicals was set up to build the Tianjin refinery and sell refined oil products in China and on Asian markets.

Both companies are set to make an investment decision on the construction of the Tianjin refinery in March 2016. The refinery’s construction is expected to be completed by the end of 2019.

Rosneft and CNPC also intend to take efforts to develop LNG projects, including the potential supplies of Russian liquefied natural gas to China.

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