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. Last Updated: 07/27/2016

Russia, China Sign Pipeline, Jet Deals

APRongji, left, and Kasyanov meeting Saturday in St. Petersburg at a signing ceremony for seven agreements on trade and energy.
ST. PETERSBURG -- Russia and China, striving for deeper economic and political ties, put real money on the table Saturday in deals to pump Siberian oil to China and sell new Russian jetliners to Beijing.

During talks between Prime Minister Mikhail Kasyanov and Chinese counterpart Zhu Rongji, officials said they had agreed to build a 2,400-kilometer pipeline by 2005 that will eventually carry 30 million tons (219 million barrels) of oil per year.

Beijing also agreed to buy five Tupolev 204 jets, with a view to buying 10 more at a later date, in a deal that could be a lifesaver for Russia's struggling civil aircraft industry.

"The accent today stresses cooperation in economic and civil spheres ... and shows that term ?strategic partnership' is supported by real content," Kasyanov said on RTR television.

Chinese President Jiang Zemin and President Vladimir Putin signed a cooperation treaty in July, their third meeting in a year, and have backed closer economic and political ties between the Cold War-era rivals.

Interfax quoted Kasyanov as hailing the increase in trade between the countries this year to an expected $10 billion, up from about $5.5 billion in 1999. Russia is China's ninth largest trading partner, while China is Russia's sixth biggest.

"I think our leaders and government consider these as positive moves over quite a short period of time," he said.

Russia's Energy Ministry said No. 2 oil producer Yukos, state pipeline monopoly Transneft and China's National Oil Co. had signed an outline deal to build the pipeline from the giant Kovykta field in eastern Siberia by 2005.

The cost of construction, tariff levels and details of Russia and China's cooperation on the project should be finalized by July 2002, and a blueprint of the pipe and its route should be ready by July 2003. The Energy Ministry said Friday the deal would be worth $2 billion.

"The signing of a general agreement takes cooperation between Russian and Chinese oil companies to a new level, with the creation of a new direction for Russian oil exports and the diversification of energy sources for China," Interfax quoted Yukos CEO Mikhail Khodorkovsky as saying.

Last year, China imported just 1.45 million tons of crude from Russia, most of which was shipped by rail. But imports of Russian oil have been included in China's development plan for 2001-05 because of dwindling energy sources.

China, a net crude importer since 1993, saw imports peak in 2000 at 60 million tons, about a quarter of consumption. More than 60 percent of imported crude came from the Middle East.

As well as a Russia-China pipeline, the Russian government is also to mull a project for a pipeline to Russia's Pacific coast from the Siberian hinterland, state pipeline monopoly Transneft said last week.

The government will decide whether to build both pipelines or just one sometime after the middle of 2002.

Kasyanov said China had agreed to buy five of Russia's new Tu-204 passenger jets "as a kind of test" and could go on to buy another 10 in future. The first five will be delivered in two to three years, officials said.

"We talked about the possibility of jointly creating new airline models and organizing production in the future," Prime-Tass quoted Kasyanov as saying. "We could make all kinds of high-tech products together," he added.

Industry sources have said the plane deal could be worth up to $160 million and aerospace analysts say the sale may be a major breakthrough for Russia's struggling civil plane builders.

In addition to economic cooperation, Moscow and Beijing are interested in boosting relations to counter what they consider U.S. hegemonism and plans for a national missile defense system.

Russia and China warn that the proposed U.S. missile shield could tilt the strategic balance and trigger a new arms race.

Zhu was scheduled to travel to Moscow on Monday for talks in the Kremlin with Putin.

(Reuters, AP)