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Russia, China sign 'unprecedented' $270 billion oil deal

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posted on Jun, 22 2013 @ 06:32 AM

SAINT PETERSBURG: Russian oil giant Rosneft and Chinese state firm CNPC signed on Friday a $270 billion deal to supply China with oil over 25 years as Russian President Vladimir Putin pushes to diversify the country's energy customer base away from Europe.

The agreement between Russia, the world's largest energy producer and China, the world's largest energy consumer - one of the biggest deals in the history of world oil industry - was signed by Rosneft chief executive Igor Sechin and CNPC head Zhou Jiping in the presence of Putin.

"An estimated value of the contract in current market parameters is absolutely unprecedented - 270 billion dollars," Putin said in a speech to investors at the annual Saint Petersburg International Economic Forum after overseeing the signing of the deal together with visiting Chinese Vice Premier Zhang Gaoli.

Under the deal, the heavily-indebted Rosneft is slated to receive an upfront payment of around $70 billion, Putin said.

Under another deal, CNPC will acquire 20 per cent in an Arctic liquified natural gas project in which France's Total has 20 per cent and Russian independent gas firm Novatek holds the rest.

Putin has made a priority of stabilising Russia's sometimes prickly relations with its giant eastern neighbour at a time when its ties with the West are becoming ever more problematic.

Russia wants to diversify its base of energy customers away from crisis-hit Europe and is aware it has not fully exploited the colossal potential of Asian markets, China in particular.

"Consumption will be growing in China. And in Japan consumption will be growing, too," Putin said. By contrast, he added: "Europe is going through some certain difficulties."

Addressing chiefs of global energy companies like Eni, Exxon Mobil and Statoil, Putin hailed what he called "a new era of cooperation" with Russia's strategic partners.

Top Putin ally Sechin told reporters earlier that the deal would involve the delivery of more than 360 million tonnes of oil over 25 years with a total value of $270 billion (204 billion euros).

The initial agreement was reached during a visit to Moscow in March by Chinese President Xi Jinping, his first foreign visit after taking over from Hu Jintao as the country's leader.

That agreement pledged to gradually triple the supply of Russian oil to China over the next 25 years from their current level of 15 million tonnes per year. Putin said that under the contract Russia will be sending up to 46 million tonnes of oil to China annually.

The oil in the $270 billion deal would be delivered to China from the existing Eastern Siberia-Pacific Ocean (ESPO) oil pipeline that would pump the oil directly to the Chinese region of Mohe.

"The European market is stagnating, the structure of demand is changing -- less oil is being bought and more oil products - so it is not a very promising market," said Valery Nesterov, an analyst at Sberbank CIB.

The upfront payment would allow Rosneft, which this year acquired the British-Russian joint venture TNK-BP in a $55 billion deal, to cut its debt, Nesterov added.

"It's a landmark deal," added Karen Kostanian, an oil and gas analyst at Bank of America Merrill Lynch in Moscow, noting that the deal would also allow Rosneft to develop new fields in eastern Siberia.

Among a host of other energy agreements signed in Saint Petersburg, CNPC and Russian independent gas producer Novatek signed a deal to send Russian liquified natural gas (LNG) to China.

Under the deal, CNPC will purchase 20 percent in the Russian Arctic project known as the Yamal LNG in which France's Total has 20 percent and Novatek holds the rest. The project is scheduled to start producing gas in 2016.

Rosneft also signed agreements with Eni, Exxon and Statoil on LNG supplies.

Putin said tapping into the potential of the Asia-Pacific markets would allow the country to liberalise LNG exports.

Russia's state gas giant Gazprom is also working to finalise a potentially huge gas deal with China but a commercial contract has so far proved elusive as talks have become mired in pricing disputes.

"Rosneft managed to do what Gazprom has not been able to do yet," said Kostanian.

So now Russians are diverting its markets to china from the falling Economies in Europe ..

posted on Jun, 22 2013 @ 06:43 AM
WOW, that's a huge deal.

posted on Jun, 22 2013 @ 06:46 AM
Meanwhile the united states spends more on its military annually
than this will cost china, yeah we are soo bad off economically, maybe
if we didn't spend more on military than china is spending on oil in the
next 20 years....... think about the magnitude of that spending.... its just

posted on Jun, 22 2013 @ 06:53 AM
reply to post by maddy21


All this done while the west is still talking about setting up the biggest trades ever.

Infact they are not really talking about it yet...

A big screw you west, you think your so clever kind of deal?
I don't know I'm gonna do a bit digging into this because it IS huge.

Thanks OP star and flagged

Here is a few other links for anyone interested in this story:

The independent
BBC news
Times of Oman

I'd also like to add that deals like this that are unprecedented and unexpected can have a huge effect on world trade and the value of the commodities in question.
edit on 22-6-2013 by RAY1990 because: more to add

posted on Jun, 22 2013 @ 07:39 AM
its been in the works for a few years ... brother in law was help with the chinese side of the negotiations ...

posted on Jun, 22 2013 @ 11:50 PM
And Europe was so close to free energy by 1945.
Some one messed up bad.

All that hard work destroyed by European conquest that was stopped
by oil rich Allies ensures oil has the hearts and ears of the masses.

Perhaps its better that the world keeps dealing in oil instead of knowing
how the blast each other with atmospheric HAARP instruments.

posted on Jun, 23 2013 @ 02:22 AM
reply to post by Expat888

Can the american people just hand over the democrats/republicans/everyone in the obozo administration to the russians and the chinese now?

Put them in gulags - let's let some real americans work to make america great again - get rid of the illegal CIA drug trade - tell the truth about all of the things the US gov't has been up to all of these years - and hand all the still alive criminals to the russian/chinese.

posted on Jun, 23 2013 @ 04:20 AM

Originally posted by DaRAGE
WOW, that's a huge deal.

And to think there are those on this board who snipe and jeer at people who are interested in alternative energy...often the question is asked; "And why would they suppress this technology if it worked, they'd be all over it installing the things in homes everywhere..."

Well, here's 270 Billion reasons why they wouldn't dream of doing anything of the sort!

And this is just one deal.

posted on Jul, 2 2013 @ 07:24 PM
Free energy has been shown to be too powerful.
All we need and much more.
The thing is it is against national security to have more power than the government.
This is where Tesla and many others have found out the hard way.

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