Russia and China close oil deal
The state-owned company Rosneft announced that it has received an advanced payment from China for the oil deliveries. The oil giant has signed deals with Beijing in order to boost its supplies to the Chinese economy and diversify away from Europe, but the import diversification is only part of the benefit. Professor Anatoly Dmitrievsky looks at the Russian side of the ‘wins’:
Signing the contract to supply Russian crude oil to China is important to Russia, because the pipeline carrying the oil. The WSPO pipeline, which stands for West Siberia-Pacific Ocean, goes through the main oil reserves areas which have been discovered so far as well as covering the promising regions where.
As China's economy continues to grow, the demand for oil will keep increasing. Chinese economic experts in the field estimated that China's oil demand in 2014 will reach 518 million metric tons with an annual growth of 4 percent. The crude imports will reach 298 metric million tons, up 7.1 percent year-on-year. In line with the figures, Rosneft plans to supply 360 million metric tons of crude oil to China for a period of 25 years. Russia’s budget, in its turn, will be boosted by additional revenue of up to $2.5 billion annually in export duties paid by Rosneft. The dry math of the deal is coupled with further expansion and development prospect that Russia may have in the region. Mr. Dmitrievsky comments further:
First and foremost we are neighbor countries. Second, Russia disposes of substantial reserves of gas and oil, which are located in the regions bordering with China. Whereas China has a clearly increasing demand for those very energy resources, following its impressive economic development over the past 15-20 years.
An upsurge in eastbound energy supplies from Russia has worried certain European governments, which rely heavily on oil and gas from Moscow.