China Signs $5.5 Billion Russian Trade Deals Including Energy and Mineral Plans

Russian Prime Minister Vladimir Putin is visiting Beijing on Oct. 12-14, at a time when the People’s Republic of China and Russia are celebrating the 60th anniversary of their diplomatic ties. Russian Prime Minister Vladimir Putin visits China starting Monday, with deals worth $5.5 billion expected to be signed during his visit. Putin will also attend a meeting in Beijing of the Shanghai Cooperation Organization (SCO), a grouping of central Asian states.

Trade between the two nations soared over 38% last year to $55.9 billion. China is Russia’s second largest trade partner after the European Union, and the two sides expect bilateral trade to increase to $60-80 billion by 2010.

- The 34 deals that could be signed on Tuesday in Beijing include a $500 million loan agreement between China’s Development Bank and its Russian equivalent VEB, and joint projects in transport, infrastructure, construction and mineral extraction. Specifically, Arctic Russia has a huge potential for the production of minerals. For example, 91% of natural gas production and 80% of Russia's explored reserves of explored natural gas are located in the Arctic. The Arctic also contains 90% of its offshore reserves of hydrocarbons. According to Burakova (2005), the estimated value of Arctic minerals was $1.5-2 trillion. In addition, there were 25 mines operating in Arctic Russia in 2006. The majority of these mines were Ni-Cu mines but Sn, U and phosphate were also mined. Because the last ice age removed the topmost sediment layer of the soil, the Kola Peninsula (which occupies 129,500 km2) is extremely rich in various ores and minerals, including apatite, alumina, iron ore, mica, titanium, phlogopite and vermiculite. The Kola Superdeep borehole is also located on the Kola Peninsula near the Norwegian border. See all of the U.S. Energy Information Administrations analysis of Russian oil, gas, energy and minerals resources charts, tables and graphs... RUSSIAN ENERGY PROFILE

- Russia’s Sistema group is due to sign a $200 million deal with the Bank of China and telecom equipment maker ZTE Corp. (ZTCOF.PK).

- China National Materials (Sinoma) and investment holding company CNBM is due to sign construction deals with Russian cement maker Eurocement.

- The two also plan an agreement on Chinese involvement in a high-speed railway in Russia - China is hungry for Russian mineral resources and Moscow is keen to diversify away from Europe for its oil and gas sales.

- China agreed in April to lend $10 billion to Russian oil pipeline monopoly Transneft and another $15 billion to state-run oil major Rosneft in exchange for 300 million tons of Russian oil to be transported over the pipeline over 20 years.

– Russia’s nuclear power technologies were adopted by China National Nuclear Corporation, China’s leading nuclear power developer, in its Jiangsu plant which has two 1.06-gigawatt nuclear power reactors in operation and is expected to be expanded further.

- Gazprom (OGZPY.PK) the Russian gas export monopoly has already moved forward that building two major pipelines to China despite delays due to disagreements over gas pricing.

Despite recent positive developments that look to be promising historically relations have been mixed with China and Russia share similar stances on many international issues. Both are wary of U.S. military power and have often joined in the United Nations Security Council to deflect tougher action against Iran and North Korea.

-- Moscow strongly backs Beijing's tough position on its restive western regions of Xinjiang and Tibet, and Beijing has also backed Moscow on issues such as Chechnya.

-- The two have a history of mutual rivalry and distrust that constrains cooperation. China and the former Soviet Union split in the early 1960s over doctrinal disputes, and there were brief border battles at the time. They have since settled some disputes over their 2,672-mile border.

-- Both countries are key members of the SCO, a grouping of central Asian states. Moscow is wary of Beijing extending its economic and security influence into the region.

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Comments

[Ferdinand E...:]

Well, there it is. The Russians are already building large pipelines toward China. The moronic Swedish government was worried about the Russians building piplines at the bottom of the Baltic - perhaps because they thought that someday they would carry Russian special forces to the Swedish archipeligo, where they would crash those great summer parties - but they won't have to worry for much longer.

I wonder why the people who want to buy Russian gas didn't tell the moronic Swedish government to keep its mouth shut.

Incidentally, this is a very valuable article.

Oct 13 09:46 AM

[blanco-dee:]

Heck, communism was the best thing the good ole' US ever had goin for it! Now that our comrades in Russia and China have discovered the benefits of capitalism they can take us down without a shot fired,

Was it Trotsky or Marx who said we'd sell them the rope to hang us? Or was it Lenin?

Oct 13 09:47 AM

[jerrydd:]

As China will find out, Russia will use this pipeline to control China just as they try to control Europe. with theirs. And they need China as Europeans will get theirs cheaper elsewhere. Europe has a lot of shale that new tech opens up.

Sweden is not limited to Russian gas. Wind generators can make heat cheaper than electricity or neighborhood power/heat plants could be used from wood pellets.

Or higher insulation which when done right, just the heat of the people, electronics, lighting will keep them warm even that far north. Others are wood pellets and tidal/hydro power. Or get a LNG terminal or 2 and have their shipyards build 2-3 LNG tankers and get Canadian, Middle East, SE Europe, etc maybe even US NG.

Since Sweden had oil it likely has the now doable shales for oil/NG. These are the likely future low cost for them. Maybe they go nuke too.

Facts are there is no shortage of energy, just the lack of simple equipment to catch, make, use it. But the facts are at $100/bbl most RE, EV's become very viable, just will take a while to get then in big time production.. But $150/bbl oil will force the issue and as you know, the low cost wins in the long haul.

Oct 13 12:28 PM

[HaavBline:]

On paper, Russian oil and gas are very attractive to the Chinese. They are neighbors and the energy supply can be delivered economically though pipelines. But the Chinese has long found that dealing with the Russian can be most unpleasant and risky.

The Russians had been playing the oil pipeline game between the Chinese and the Japanese for more than a decade. The Chinese had long given up on the Russians and pursued their energy needs all over the world from Central America to Africa to Latin America and Canada. It would be nice if they now get access to Russian oil and gas, but they know they can not count on the Russians to honour their 'plans' and 'aggreements'.

The global financial crisis proves that it is the Russians who made a big strategic error for more than then years in their economic development by treating the East Asian markets as only a fall-back market and negotiating lever, rather than seriously developing the Asian markets to complement their focus as energy supplier for Europe. With European energy demand tanking, the Russian GDP this year will shrink by 9%, and that is why the Russians now are scrambling for China deals. They will now need to redouble their efforts to repair their credibility problems with not only the Chinese but also the Japanese and Koreans, as the East Asians have developed alternative sources.

Oct 13 01:39 PM

[artkarl:]

It doesn't much matter how it plays out between the major actors, conservation and green sources will win out as the effective manner of behavior.
Materialism and consumerism should never be the primary concerns of existence, there's just not enough planet to go around when that's the 'game.'

Oct 18 03:01 PM