Russian oil major OAO Rosneft (ROSN.RS) is in talks with China on extending its current supply contract for five more years, the newspaper Kommersant reports Thursday, citing an unnamed source familiar with the matter.
The existing supply deal stipulates Rosneft will deliver 48.4 million tons of oil to China by 2010, by rail. In November the two parties agreed the discount to the price of Brent crude would narrow to $2.325, with a further $1 reduction in February.
China isn't giving any further discounts on the existing contract, the same source said. The source said China offered Rosneft a discount on the new contract if the oil producer would sign a memorandum promising to supply 10 million tons of oil a year.
Rosneft can't guarantee anything before the transportation tariff is fixed, an unnamed source in Rosneft said. A preliminary figure of $38.8 looks viable, the source added.