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Russia's Prime Minister visits China with official delegation

October 22, 2013, 14:35 UTC+3

Russian officials discuss governmental, economic cooperation

1 pages in this article
Li Keqiang, Dmitry Medvedev during ceremonial meeting. Photo ITAR-TASS/ Ekaterina Shtukina

Li Keqiang, Dmitry Medvedev during ceremonial meeting. Photo ITAR-TASS/ Ekaterina Shtukina

BEIJING, October 22 (Itar-Tass) - Prime Minister Dmitry Medvedev expects that Russia-China agreements regarding natural gas will be documented and executed. At an online conference in China, Medvedev said the countries were deciding on format and pricing of the gas deal, adding that the process should be finalized soon. Russia’s Energy Minister Alexander Novak said that Russia’s Gazprom and China’s CNPC are expected to sign a contract by the end of 2013, which entails gas shipments from Russia through the “Eastern route.”

Russia’s Energy Minister Alexander Novak said that Russia’s Gazprom and China’s CNPC are expected to sign a contract by the end of 2013, which entails gas shipments from Russia through the “Eastern route,” with the maximum volume of 38 billion cubic meters per year. “If the agreement is signed this year, shipments may begin in 2018-2020,” the official said. Deputy Prime Minister Arkady Dvorkovich later expressed firm belief that the Gazprom deal with China will be signed by the end of 2013.

Gazprom and CNPC signed the memo for the gas pipeline deal this March. Back then Alexey Miller, head of Gazprom, said that Russian fuel shipments may be prepaid with the total amount of up to $25 billion.

In June, CNPC proposed another pricing option, linking it to  the Henry Hub liquefied natural gas price (LNG). Gazprom replied that it was not prepared to coordinate its prices with those for American LGP.

Novatek gas deal

Russia’s NOVATEK and China National Petroleum Corporation (CNPC) has signed the framework conditions of the Agreement on the purchase and sale of liquefied natural gas (LNG) between JSC Yamal-LNG and PetroChina International.

The document was signed during Russian Prime Minister Dmitry Medvedev’s official visit to China.

The Yamal-LNG project envisages the construction of an LNG plant in Yamal with the capacity of more than 15 million tonnes per year on the resource base of the South-Tambeyskoye gas field, the licence for the development of which belongs to NOVATEK, as well as the building of an ice-class fleet. The proven and probable gas reserves of the field as of the end of 2011, according to PRMS standards, reach 879 billion cubic metres. The project implementation involves the creation of transport infrastructure, including a seaport and an airport, near the Sabetta village (northeast of the Yamal Peninsula). The cost of the project is estimated at $20 billion, taking into account the development of the South-Tambeyskoye field.\

The South-Tambeyskoye field was discovered in 1974. The field has five shallow gas horizons and 37 deeper gas condensate horizons. The depth of the horizons varies from between 900 to 2,850 metres. Based on total proved reserves, the South-Tambeyskoye field is the largest field in NOVATEK’s reserves portfolio.

The agreement on the acquisition of a 20-percen stake in the authorised capital of Yamal-LNG by China National Petroleum Corporation was signed within the framework of the St. Petersburg International Economic Forum in June. The document provides for a long-term contract on the supply to the Chinese side of at least 3 million tonnes of liquefied natural gas per year and contains the condition that CNPC would actively attract external funding for the project from Chinese financial institutions.

Growth rate

China expects to maintain the annual growth rate of trade with Russia at the level at least 4.5 percent, President of China Chamber of Commerce for Import and Export of Machinery and Electronic Products (CCCME) Zhang Yujing stated on Tuesday. He spoke at the 18th regular meeting of the heads of government of Russia and China at the Chinese-Russian business communities’ economic forum in Beijing.

However, the Chinese representative admitted that since the beginning of this year, the bilateral trade volume has fallen by 0.5 percent, compared with the same period last year, amounting to 58.7 billion U.S. dollars.

Zhang said that the two countries’ leaders have set the goal to increase the annual trade volume to 100 billion U.S. dollars by 2015 and up to 200 billion dollars - by 2020.

The Chinese expert believes that the situation can be improved by increasing the supplies of Russian oil to China, which are planned to be doubled by 2018, up to 30 million tonnes per year. The Chinese side also looks forward to the start of deliveries of Russian natural gas. Contracts in this sphere are expected to be signed before the end of this year.

Zhang considers it necessary to “reduce the dependence on the raw material component.” To accomplish this task, the share of machinery products in the bilateral trade volume should be increased.

Boosting investment volume

China intends to boost the investment volume in Russia to 12 billion U.S. dollars by 2020, Zhang Yujing added.

Zhang said that today the volume of Chinese investment in the Russian economy is just about 3.5 billion U.S. dollars. According to him, to significantly increase the presence of Chinese capital in Russia over the next five years, the Russian side first of all needs to “increase the transparency of its economic legislation and improve the investment climate for the Chinese capital.”

He added that China aims to invest in the development of Russia’s infrastructure, the housing sector, the mining industry and the production of high-technology equipment.

Housing projects for Russia's flood-stricken Far East

China's State Construction Engineering Corporation (CSCEC) is to partIcipate in Russia's state house-building programme. The agency, one of the world's largest in its field, will help construct 1.5 million square metres of living space in Khabarovsk, a city near the Chinese border, President of the Builders Association of Russia Nikolai Koshman told Itar-Tass behind the scenes of Beijing’s Russian-Chinese economic forum on Tuesday.

Chinese investors will help build 15,000 apartments in a project carried out by Russian construction association Svoy Dom. Financing by China's Exim Bank is being negotiated now, Koshman said.

“The Chinese company will come with its capital and act as a developer. The site is now being developed, with gas, electricity facilities and roads under construction,” Koshman added. Main construction work may begin as soon as early 2014, he said, noting that the project “was directly aimed to overcome the consequences of this year’s floods”.

Labor would be Russian, he said, but Chinese builders would be engaged if needed.

The same financing scheme will be used to build a 600 MW gas turbine power station in Moscow and multi-storey houses of about two million square metres between Volokolamskoye and Novorizhskoye highways.

Coal projects

Chinese companies are ready to take part in the tenders for the development of coal projects in Russia, Russia's Minister of Natural Resources Sergei Donskoi told reporters.

“A number of projects are being prepared,” the minister said. “As soon as the tenders are announced, I think Chinese companies would plan to take part in them.”

Donskoi stressed that everything would depend on the announced terms and the extent to which they are satisfactory to the Chinese side. “The preparation is currently underway. Because we are not doing the project for the Chinese, but preparing it to suit our tasks,” Donskoi explained.

Mail service

Russian and Chinese postal services are set to expand routes for mail delivery to Russia under a memorandum of understanding on cooperation between Russian Post and China Post.

The two countries’ postal operators inked the deal during Russian Prime Minister Dmitry Medvedev’s visit to China on Tuesday.

“In particular, they plan to open an auto route from China to Orenburg in the Urals. By the end of the year Russia and China can reach an agreement to open a rail route for mail delivery and expand the map of airmail routes through flights from Harbin and Beijing to Novosibirsk and Yekaterinburg,” the press service of Russian Post said, adding that the two countries’ postal services agreed to expand border postal exchange through Vladivostok in Russia’s Far East.

Under the memorandum China Post will sort out letters and packages for recipients in Siberia and the Far East without sending it to Moscow as before, but to international postal exchange points in Novosibirsk and Yekaterinburg. “These measures will improve logistics of mail delivery and speed up the delivery of mail items to Russian recipients,” the press service said.

At present, China accounts for 41 percent of Russia’s international mail items. Russians mainly buy goods in China’s online shops. As a result, the number of small packages from China increased from 198,000 in 2010 to 1.789 million in 2012.

“Taking into account the fact that the number of postal items continues to grow, stronger cooperation with China Post is one of Russian Post’s strategic areas,” the press service said.

Student exchange

 Russian-Chinese student exchanges will hopefully reach 100,000 people annually in the coming years, Russia’s Prime Minister Dmitry Medvedev said Tuesday in the course of an online conference with Chinese Internet users.

“We have about 25,000 Chinese students in this country at present,” he said adding that the majority of them had come to Russia to get commercial tuition, while about 500 young men and women were studying at government-funded places at universities.

At the same time, about 15,000 young Russians are studying at Chinese universities at present.

This means that student exchanges currently stand at around 40,000 people a year.

“We /Russian and Chinese governments - Itar-Tass/ agreed on raising the figure to 100,000 students a year in the coming years,” Medvedev said. “I think the figure reflects well enough the two countries’ potential.”

Anti-corruption experience

Russia is eyeing China’s anti-corruption experience, Medvedev added.

He recalled that Russia recently adopted laws fighting corruption, including compulsory income and expense declaration and a ban to open financial accounts in foreign banks.

“I cannot say that we turned the tide and everything is normal at our place. Corruption is a great, endemic problem of our country and we need to make great efforts to improve the situation,” Medvedev said.

“Russia is carefully studying China’s experience in this sphere,” he said. “You have experience based on the Chinese traditions and this is an interesting experience. We have to admit that a range of measures you are taking is very tough and in our legislation such measures are inadmissible,” he said. “But I think that such measures yield certain results.”

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