A top Russian energy official said China will provide Russian oil firms with "considerable" loans in return for increased oil supplies as Moscow and Beijing agreed on details of a new pipeline linking the two countries.
Deputy Prime Minister Igor Sechin didn't say how much money China would be willing to lend, adding that the amount would depend on future oil-supply contracts between Russian oil and pipeline companies OAO Rosneft and OAO Transneft, and Chinese energy giant CNPC Sinopec.
Such a loan would be timely for oil major Rosneft, which finds itself heavily indebted at a time when the global credit markets are all but shut. It has already faced at least one margin call from creditors.
Any oil-for-credit deal would also help Russia further diversify its customer base for oil exports. Speaking during a visit to Moscow by Chinese Premier Wen Jiabao, Mr. Sechin told reporters that Russia was looking for new markets. "We need to seek a replacement for those markets which have stabilized or where consumption has fallen off," Russian news agency Interfax quoted him as saying. He added that he expected a supply deal to be signed by Nov. 25.
Some media have reported that the loans could be as high as $25 billion. Spokesmen for both Rosneft and Transneft declined to comment on that figure Tuesday, saying only that talks were continuing.
A deal was also signed Tuesday between Transneft and CNPC to build a pipeline spur that would link the two countries' trunk pipelines. A Transneft spokesman said the two sides had agreed on "who would build which section" but that construction and entry-into-service deadlines remained unsettled. CNPC will build a 600-mile stretch inside China leading up to the Russian border, while Transneft will construct a stretch of around 40 miles on the other side.
The pipeline is expected to be completed by the end of 2009 at the earliest. It will carry around 300,000 barrels of Siberian oil a day to China.