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. Last Updated: 07/27/2016

Chinese Gas Deal Readied For Putin

Prime Minister Vladimir Putin will oversee the signing of a much-anticipated agreement on deliveries of Russian gas to China during a three-day visit to Beijing this week, officials said Sunday.

Russian and Chinese officials forged “road maps” for cooperation in the gas sector during talks in Beijing on Sunday, and Gazprom and CNPC will sign the agreement on deliveries during Putin’s visit, which starts Monday, a source in the Russian delegation told reporters, RIA-Novosti and Interfax reported.

The signing is expected Tuesday, the source said, Interfax reported.

The agreement is “fairly general” and makes no mention of gas supplies in exchange for loans, a source close to CNPC told Interfax ahead of Sunday’s talks between teams led by Deputy Prime Minister Igor Sechin and Chinese Vice Premier Wang Qishan.

Rosneft and CNPC concluded a 20-year oil supply deal in April, under which China agreed to extend a $15 billion loan to Rosneft and another $10 billion credit to state pipeline operator Transneft. President Dmitry Medvedev said in June that a gas deal could follow that example.

“We hope that on the basis of the gas cooperation agreement with Gazprom, next year we will be able to sign a contract for gas deliveries and the construction of a gas pipeline from Russia to China,” the CNPC source said Sunday.

A gas agreement would represent a breakthrough in negotiations, which have progressed little since 2004 because Gazprom and CNPC, or the Chinese National Petroleum Company, have disagreed on the price. Hopes of an agreement emerged after Medvedev suggested following a meeting with Chinese President Hu Jintao in June that China could extend a loan to help secure supplies of the clean fuel.

In what underscores the complexity of the talks, government officials were careful to avoid comments on a potential gas deal last week.

“Sechin will hold the talks, and I don’t want to jump the gun,” Yury Ushakov, the Cabinet’s deputy chief of staff, said Friday at a news conference dedicated to Putin’s trip. “I wouldn’t want to say anything ahead of Sechin’s talks, which he has put a lot of preparations into.”

Corporate talks about a potential deal to supply gas to China have been fairly intensive in recent weeks.

Gazprom chief Alexei Miller most recently spoke about the issue Wednesday when he met with Zhou Jiping, president of PetroChina, a leading Asian oil and gas producer, on the sidelines of a gas forum in Buenos Aires, Gazprom said in a statement. It didn’t elaborate.

Previously, Gazprom and CNPC officials met in the Siberian city of Tomsk on Sept. 29 to discuss cooperation in arranging supplies, Gazprom said in a separate statement. It said the officials “initialed a document on the issues of natural gas deliveries from Russia to China.”

Miller and CNPC president Jiang Jemin met in Beijing on Sept. 15 to discuss the deal in a “constructive dialogue,” Gazprom said.

On Sunday, Sechin and Wang also discussed cooperation in other energy spheres, including progress on a spur from the East Siberian-Pacific Ocean oil pipeline, booming bilateral coal trade and possible Russian participation in new construction at the Tianwan nuclear power plant in the coastal Jiangsu province.

Sechin is planning a trip to the autonomous Inner Mongolia region to tour a gasoline and diesel refinery using direct coal liquefaction, the Russian delegation source said. After the visit, he will discuss the possibility of a joint venture with China to create such a facility in Russia.

Putin, meanwhile, is expected to attend the signing of a host of corporate deals in Beijing, Ushakov said. One of them could be a $500 million loan agreement between VEB and the Chinese Development Bank, he said, declining to name all of the potential deals because they were still in the works.

Deputy Prime Minister Alexander Zhukov said Wednesday that potential deals totaled $5.5 billion, Reuters reported.

In addition to meeting with Hu and Chinese Premier Wen Jiabao, Putin will discuss Iran’s nuclear program with Iranian First Vice President Mohammad Reza Rahimi on the sidelines of a summit of the Shanghai Cooperation Organization, a regional grouping that includes Russia, China and Central Asian states, that will be held in Beijing, Ushakov said.

Putin will also meet with Kazakh Prime Minister Karim Massimov, Afghan Second Vice President Mohammad Karim Khalili and Pakistani Prime Minister Yousuf Raza Gilani at the summit, he said.

While Putin considers Iran’s nuclear ambitions in Beijing, U.S. Secretary of State Hillary Clinton will raise U.S. concerns over the issue during a visit to Russia that starts Monday. Clinton is to meet with Medvedev and Foreign Minister Sergei Lavrov on Tuesday.