China, the world’s second largest economy, has made no secret of its interest in securing Russian energy exports, while Moscow has done little to hide its interest in supplying it.
Recent discussions and future export projects are increasingly getting mired in discussions over cost, with Beijing seeking long-term fixed price contracts, an arrangement that the Russian Federation’s leading energy companies are most reluctant to agree to.
Several months ago during a visit to the Russian Federation China's President Hu Jintao spoke about bilateral Sino-Russian trade doubling within the next four years from $55 billion in 2010 to $100, to double again to $200 billion by 2020, driven mainly by Russian energy exports to China, including oil, gas, hydro-electricity and coal.
As a non member of the Organization of Oil Exporting countries, the Russian Federation is not constrained by OPEC quotas and is eager to export as much oil and natural gas as possible when prices are high and is balking at China’s insistence on long-term, fixed price contracts, The Japan Times reported.
China has bluntly informed Russia that unless acceptable pricing arrangements for both pipeline oil and natural gas are agreed in advance, the promised energy cooperation will not go ahead as planned.
By. Joao Peixe, Deputy Editor OilPrice.com