China and Rosneft are disputing the price that the Russian company is to provide oil through its Eastern Siberia-Pacific Ocean (ESPO) pipeline, but Rosneft remains optimistic that the issue will shortly be resolved.
Rosneft issued a statement observing, "The contract price formula is unchanged. The Chinese side has demonstrated significant progress in the resolution of issues of payment for the supplies, and has paid a significant portion of the debt under the contract. It is these circumstances that instill Rosneft with the confidence that the situation will finally be resolved soon."
The ESPO pipeline represents a major strategic shift for Russia, sending its crude oil eastwards to Asian markets rather than the pattern developed in soviet times of shifting energy westwards, first for the indigenous Soviet market and then onwards to Europe. In 2003 former Yukos chairman Mikhail Khodorovskii was castigated by the Kremlin for proposing a private Yukos pipeline to supply the burgeoning Chinese market.
By. Charles Kennedy, Deputy Editor OilPrice.com
Charles is a writer for Oilprice.com